TY  - JOUR
AU  - Ghosh, Arghya
AU  - Morita, Hodaka
TI  - An Economic Analysis of Platform Sharing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13058
PY  - 2007
Y2  - April 2007
DO  - 10.3386/w13058
UR  - http://www.nber.org/papers/w13058
L1  - http://www.nber.org/papers/w13058.pdf
N1  - Author contact info:
Arghya Ghosh
University of New South Wales
School of Economics
Sydney NSW 2052
Australia
E-Mail: a.ghosh@unsw.edu.au

Hodaka Morita
School of Economics
University of New South Wales
Sydney, NSW 2052
AUSTRALIA
Fax: 61-2-9313-6337
E-Mail: h.morita@unsw.edu.au
M1  - published as Arghya Ghosh, Hodaka Morita. "An Economic Analysis of Platform Sharing," in George Baker, Takeo Hoshi, Hideshi Itoh, and Sadao Nagaoka, organizers, "Organizational Innovation and Firm Performance" Journal of the Japanese and International Economies 22(2), June 2008 (Elsevier Inc.) (2008)

M3  - presented at "TRIO Conference", December 15-16, 2006
AB  - We explore the managerial implications and economic consequences of platform sharing under  models of horizontal and vertical product differentiation. By using a common platform across different products, firms can save on fixed costs for platform development. At the same time, platform sharing imposes restrictions on firms' ability to differentiate their products, and this reduces their profitability. It might appear that platform sharing across firms makes consumers worse off because firms cooperate in their product development processes to maximize their joint profit. We find, however, that platform sharing across firms benefits consumers in our framework because it intensifies competition in our horizontal differentiation model, and because it increases the quality of the lower-end product in our vertical differentiation model. We also show new channels through which a merger makes consumers worse off in the presence of platform sharing.
ER  -