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.
|Name||Digital Regulation Project - Policy Discussion Paper|
|Publisher||Yale Tobin Center for Economic Policy|
- Competition Policy
- Digital Economy