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When "more" is not better

Author

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  • CARMELO CENNAMO

    (Instituto de Empresa)

  • Juan Santaló

    (Instituto de Empresa)

Abstract

This article examines the value-creation capacity of intra-platform competition (IPC) and exclusivity; two main strategies platforms use to incentivize, accumulate and extract rent from complementary content resources - complementors. Building on the concept of ´resource functionality´ we show that, for enhanced levels of IPC, exclusive complementors have limited functional value and rareness, failing to bring differentiation capacity to the platform´s system. Also, in line with the logic of ´capability equivalence´, we show that platform´s differentiation in terms of the composition of complementors´ portfolio has a U-shaped relationship with platform performance.

Suggested Citation

  • CARMELO CENNAMO & Juan Santaló, 2009. "When "more" is not better," Working Papers Economia wp09-06, Instituto de Empresa, Area of Economic Environment.
    • Handle: RePEc:emp:wpaper:wp09-06
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    Keywords

    Complementary resources; Intra-platform competition; Platform markets; Resource functionatility; Multi-sided markets;
    All these keywords.

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