We develop a theoretical model to understand the strategic link between a platform's and developers' strategies, and the effect of within-platform competition on developers strategies. We qualify the nature of network effects taking place within platform markets, and show that the critical determinant of platform strategies and, those of developers, is the relative importance of the two components of the network effects; what we term quality versus membership effect.
What drives a platform's strategy? Usage, membership and competition effects
Panico, Claudio;Cennamo, Carmelo
2015
Abstract
We develop a theoretical model to understand the strategic link between a platform's and developers' strategies, and the effect of within-platform competition on developers strategies. We qualify the nature of network effects taking place within platform markets, and show that the critical determinant of platform strategies and, those of developers, is the relative importance of the two components of the network effects; what we term quality versus membership effect.
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