Competition, Market Coverage, and Quality Choice in Interconnected Platforms

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Executive Summary

The authors study duopoly competition between two interconnected Internet Service Providers (ISP) that compete in quality and prices for both Content Providers (CP) and consumers. They develop a game theoretic model using a two-sided market framework, where ISP's are modeled as interconnected plat-forms with quality bottlenecks; a consumer on a low quality network accessing content on a high quality platform experiences low quality. Platforms first pick quality levels and in the subsequent stages compete in prices for both CP's and consumers.

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