Seminar by Professor Jan Krämer, Researcher at the University of Passau

We cordially invite you to attend a lecture scheduled for Tuesday, June 3, 2025. The seminar will feature a presentation entitled: “Interoperability in Digital Markets: Boon or Bane for Market Contestability?”. The study, co-authored with Professor Marc Bourreau, will be presented by Professor Jan Krämer from the University of Passau.

The lecture will begin at 15:30 in Auditorium C. Remote participation will also be possible via the Zoom platform.

Link to the meeting: https://uw-edu-pl.zoom.us/j/91304362217?pwd=3hHN9IzeRLcbsbu39IQhhkxY7GbUpm.1

[Meeting ID: 913 0436 2217
Passcode: 424958]

The seminar is organised by Professor Łukasz Grzybowski (Department of Microeconomics at the Faculty of Economic Sciences).

The abstract of the presentation is provided below.

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Policymakers around the world are debating whether interoperability obligations are an appropriate regulatory tool to promote contestability and competition in digital markets characterized by strong network effects. In the EU, the Digital Markets Act imposes horizontal interoperability obligations on dominant messaging services, requiring them to allow competing services to connect to their network. Standard economic wisdom suggests that interoperability is pro-competitive in the presence of an incumbent with a large user base, because interoperability lowers entry barriers created by network effects. However, we show that this logic is incomplete in the dynamic context of digital services, where only imperfect interoperability can be achieved and multihoming is economically feasible. In the absence of perfect interoperability, some proprietary network effects remain, and users still gravitate to the larger network to take advantage of the full richness of features. At the same time, horizontal interoperability reduces users’ incentives to multihome services, which is a strong driver of contestability. We develop a dynamic multi-period model that formalizes the trade-off between (imperfect) sharing of network effects through interoperability and reduced incentives to multi-home. We show in which cases mandated interoperability can facilitate the ability of a more efficient entrant platform to challenge the less efficient dominant platform, but also in which cases it impedes contestability. Our results have direct implications for the ongoing policy debate by demonstrating that horizontal interoperability obligations may not only have pro-competitive but also anti-competitive effects and thus may not be an appropriate remedy for regulating dominant online platforms.