Platform Competition and Interoperability: The Net Fee Model

Mehmet Ekmekci (), Alexander White () and Lingxuan Wu ()
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Lingxuan Wu: Department of Economics, Harvard University

No 21-13, Working Papers from NET Institute

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 (search for similar items in EconPapers)
JEL-codes: D21 D43 D85 L13 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2021-09
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-ore, nep-pay and nep-reg
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