Equitable Interoperability: The 'Super Tool' of Digital Platform Governance

33 Pages Posted: 27 Oct 2021

See all articles by Fiona M. Scott Morton

Fiona M. Scott Morton

Yale School of Management; National Bureau of Economic Research (NBER)

Gregory S. Crawford

University of Zurich - Department of Economics

Jacques Crémer

University of Toulouse 1 - Toulouse School of Economics (TSE)

David Dinielli

Yale - Tobin Center for Economic Policy

Amelia Fletcher

Centre for Competition Policy and Norwich Business School, UEA

Paul Heidhues

Heinrich Heine University Dusseldorf

Monika Schnitzer

Ludwig Maximilian University of Munich (LMU)

Katja Seim

Yale School of Management

Date Written: July 13, 2021

Abstract

This paper addresses interoperability a “super tool” to promote and preserve competition in digital platform markets where network effects are strong. As is widely acknowledged, these markets have an inherent tendency towards concentration, leaving consumers with little competition in the market. Mandated interoperability is a form of regulation that is less intrusive than many other forms and is particularly suited to digital business models and fast changing digital technology. We introduce the concept of “equitable interoperability,” which means that not only can an entrant join the platform, but it can join on qualitatively equal terms as others, without being discriminated against by the dominant platform that might have its own competing service. Carefully implemented, equitable interoperability breaks down entry barriers which paves the way for new entrants, which in turn creates competition and consumer choice. Interoperability transforms what might have been competition for the market into competition in the market, which is a more efficient and effective form of competition.

Suggested Citation

Scott Morton, Fiona M. and Crawford, Gregory S. and Crémer, Jacques and Dinielli, David and Fletcher, Amelia and Heidhues, Paul and Schnitzer, Monika and Seim, Katja, Equitable Interoperability: The 'Super Tool' of Digital Platform Governance (July 13, 2021). Available at SSRN: https://ssrn.com/abstract=3923602 or http://dx.doi.org/10.2139/ssrn.3923602

Fiona M. Scott Morton (Contact Author)

Yale School of Management ( email )

New Haven, CT 06520
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Gregory S. Crawford

University of Zurich - Department of Economics ( email )

Schönberggasse 1
Zürich, CH-8001
Switzerland

HOME PAGE: http://www.econ.uzh.ch/faculty/groupcrawford.html

Jacques Crémer

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

David Dinielli

Yale - Tobin Center for Economic Policy ( email )

New Haven, CT 06520
United States

Amelia Fletcher

Centre for Competition Policy and Norwich Business School, UEA ( email )

Norwich
United Kingdom

HOME PAGE: http://https://people.uea.ac.uk/amelia_fletcher

Paul Heidhues

Heinrich Heine University Dusseldorf

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

Monika Schnitzer

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Katja Seim

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

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