Interconnection Regimes for Asymmetric Platforms

We analyze the competitive effects of various interconnection regimes. Compared to the case in which platforms are not interconnected, we find that implementing within-group interconnection by a dominant group of platforms could reduce market prices and raise the interconnected platforms’ profits, whereas the profit and market share of their competitor would be harmed. Moreover, treating the regime of withingroup interconnection as a benchmark, we show that further implementing cross-group interconnection would raise all platforms’ prices and profits, but reduce the dominant group’s combined market shares