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Cited by 326Digital Platforms and EconomicsInnovation Diffusion and ForecastingSupply Chain and Inventory Management

The DOI matches its Crossref record; 59 of the 60 references it cites were found in a registry or an index.

Platform Performance Investment in the Presence of Network Externalities

Open access
Anderson, Edward G., Parker, Geoffrey G., Tan, Burcu·2014·Information Systems Research
DOI 10.1287/isre.2013.0505
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Abstract

Managers of emerging platforms must decide what level of platform performance to invest in at each product development cycle in markets that exhibit two-sided network externalities. High performance is a selling point for consumers, but in many cases it requires developers to make large investments to participate. Abstracting from an example drawn from the video game industry, we build a strategic model to investigate the trade-off between investing in high platform performance versus reducing investment in order to facilitate third party content development. We carry out a full analysis of three distinct settings: monopoly, price-setting duopoly, and price-taking duopoly. We provide insights on the optimum investment in platform performance and demonstrate how conventional wisdom about product development may be misleading in the presence of strong cross-network externalities. In particular, we show that, contrary to the conventional wisdom about “winner-take-all” markets, heavily investing in the core performance of a platform does not always yield a competitive edge. We characterize the conditions under which offering a platform with lower performance but greater availability of content can be a winning strategy.

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Crossref · 10.1287/isre.2013.0505

Cites

59 of 59 references verified0 citation errors · 0 not checkable

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Citations

Cites

Show all 60 references

Research works printed but not linked: 20

  1. Allen D, 2006, PCWorld
  2. Armstrong M, 2009, Econom. J., 119, 270
  3. Arthur B, 1989, Econom. J., 99, 116
  4. 10.1145/800027.808439 · DOI
  5. Dutka B, 2009, PSXExtreme
  6. Eisenmann TR, 2006, Harvard Bus. Rev., 84, 92
  7. 10.1002/smj.935 · DOI · Paper page
  8. Farrell J, 1986, Amer. Econom. Rev., 76, 940
  9. Gawer A, 2008, MIT Sloan Management Rev., 49, 28
  10. Hasseldahl A, 2005, BusinessWeek.com
  11. Katz ML, 1985, Amer. Econom. Rev., 75, 424
  12. Kim R, 2007, San Francisco Chronicle
  13. Leheng Q, 2006, TechGate
  14. Parker G, 2009, Comm. Amp; Strategies, 17
  15. Schoenberger CR, 2008, Forbes
  16. Sheffield B, 2008, Game Developer, 15, 2
  17. Sinclair B, 2006, Gamespot
  18. Tirpak JA, 2007, Air Force Magazine, 90, 40
  19. Tiwana A, 2010, Internat. Statist. Rev., 21, 675
  20. Wen H, 2007, Gamasutra

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Metadata

Authors
Anderson, E. G., Parker, G. G., & Tan, B.
Affiliations
  • The University of Texas at Austin (US)
  • Tulane University (US)
ORCID
Venue
Information Systems Research
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2014-03
Volume
25
Issue
1
Pages
152-172
ISSN
  • 1047-7047 (ISSN-L)
  • 1526-5536
DOI
10.1287/isre.2013.0505
OpenAlex
W3123202234
Cited by
326
References
60
Citations by year
2026: 21 · 2025: 37 · 2024: 50 · 2023: 44 · 2022: 25 · 2021: 31 · 2020: 31 · 2019: 16 · 2018: 28 · 2017: 9 · 2016: 20 · 2015: 7 · 2014: 5
FWCI
32.41
Type
journal article
Language
en
Open access
Locations
  • Information Systems Research (publishedVersion)
  • SSRN Electronic Journal (acceptedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Innovation Diffusion and Forecasting
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Supply Chain and Inventory Management
Keywords
video game industry, product development strategy, monopoly, duopoly, winner-take-all markets

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