Platform Competition and Interoperability: The Net Fee Model

46 Pages Posted: 25 Oct 2021

See all articles by Mehmet Ekmekci

Mehmet Ekmekci

Boston College - Department of Economics

Alexander White

Tsinghua University - School of Economics & Management

Lingxuan Wu

Department of Economics, Harvard University

Date Written: September 30, 2021

Abstract

We study the effects of competition and interoperabilty in platform markets. To do so, we adopt an approach of competition in net fees, which is well-suited to situations where users pay additional charges, after joining, for on-platform interactions. Compared to other approaches, net fees expand the tractable scope to allow platform asymmetry and variable total demand. Regarding competition, our findings raise concerns, including possible dominance-inducing entry, which symmetric models overlook. Our results are more optimistic towards the helpfulness of policies that promote interoperability among platforms, but they urge caution when total demand variability is a significant factor.

Keywords: Platform Competition, Big Tech, Net Fees, Interoperability

JEL Classification: D21, D43, D85, L13

Suggested Citation

Ekmekci, Mehmet and White, Alexander and Wu, Lingxuan, Platform Competition and Interoperability: The Net Fee Model (September 30, 2021). NET Institute Working Paper No. 21-13, Available at SSRN: https://ssrn.com/abstract=3945134 or http://dx.doi.org/10.2139/ssrn.3945134

Mehmet Ekmekci (Contact Author)

Boston College - Department of Economics ( email )

United States

Alexander White

Tsinghua University - School of Economics & Management ( email )

Mailbox A-44
Weilun Building
Beijing, 100084
China

HOME PAGE: http://alex-white.net

Lingxuan Wu

Department of Economics, Harvard University ( email )

Cambridge, MA 02138

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