Seminarios Académicos

Abstract: We study the development of apps on competing platforms. We first show that, whenever an increase in the commission charged by a platform reduces the number of apps present on another platform, competition leads platforms to charge commission rates that exceed the level maximizing consumer surplus (and, a fortiori, social welfare). We then study a simple setting in which a fraction of developers can port their apps across platforms at no cost, and find that platform competition then always leads to excessive commissions; furthermore, as this fraction tends to one, commissions become so high that they deter any app development.