Competition, Market Coverage, and Quality Choice in Interconnected Platforms

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.