Open Transaction Networks and Platform Competition

Abstract

This paper studies Open Transaction Networks (OTNs), open protocol-based networks in which buyers and sellers connected through independent applications can transact with one another. India’s Open Network for Digital Commerce (ONDC) is the leading real-world instance. We develop a two-sided Hotelling model in which two competing platforms choose whether to adopt the shared protocol on the buyer side, the seller side, both sides, or neither. Existing theory suggests that platforms typically underinvest in interoperability. We show that full interoperability between competing platforms can instead emerge as the equilibrium outcome of platform competition.

Kishen Shastry

Economist | PhD, University of Cambridge

Economist with a PhD from the University of Cambridge and Postdoctoral Research Associate at the Cambridge Centre for Alternative Finance, working on development economics, the economics of religion and informal institutions, and digital technologies and platforms.