Cambridge, MA; Alfred P. Sloan School of Management, Massachusetts Institute of Technology
Abstract
We explore innovation, openness, and the duration of
intellectual property protection in markets characterized by platforms and their ecosystems of complementary applications. We
find that competition among application developers can reduce
innovation while competition among platforms can increase innovation. Developers can be better off submitting to platform
control as opposed to producing for an unsponsored platform.
Although a social planner would open a platform sooner and to
a greater degree than would a private platform sponsor, a platform sponsor’s ability to control downstream innovation gives it
reason to behave more like a social planner. However, if platforms are to perform this role, platform sponsors need longer
duration rights than application developers. Results can inform
antitrust and intellectual property regulation, technological innovation, competition policy, and intellectual property strategy.The National Science Foundation, Cisco Systems Inc, and The Microsoft Corporatio
