October 2, 2025, 14:00–15:00
Zoom meeting
Economics of Platforms Seminar
Abstract
We develop a framework to study how interoperability between competing platforms effects equilibrium prices and welfare. Our analysis considers two dimensions: interoperability strength—the extent to which network benefits spill over across platform users—and interoperability configuration including industry-wide, coalitional, and hub-and-spoke arrangements. We characterize pricing equilibria under different configurations and show that, contrary to conventional wisdom, interoperability can intensify competition: a price cut by one platform may increase demand for its coalition partners, prompting all members to lower prices. We then compare prices, consumer surplus, and market shares as interoperability strength and configuration vary. Our findings show that the effects of interoperability depend crucially on its structure, with coalition- and hub-and-spoke arrangements in some cases yielding higher welfare than the conventional industry-wide model.
Keywords
network; platforms; interoperability; interconnectivity; compatibility; data sharing; learning curve; coalitions;