Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/41801

Too Big to Fail? Overcrowding a Multi-Sided Platform and Sustained Competitive Advantage

File SizeFormat 
paper0652.pdf1.63 MBAdobe PDFView/Open

Item Summary

Title: Too Big to Fail? Overcrowding a Multi-Sided Platform and Sustained Competitive Advantage
Authors: Huotari, Pontus
Keywords: Multi-sided platform
Competitive advantage
Winner-take-all
Agent-based modeling
Simulation
Issue Date: 04 Jan 2017
Abstract: Multi-sided platforms are increasingly common, which is no surprise given the winner-take-all dynamics in platform-based markets. That is, the platform with the biggest installed base of buyers and sellers can arguably sustain its competitive advantage because of positive indirect network effects. We reexamine this argument with an agent-based simulation model, where we allow for variety seeking and probabilistic buyer affiliation with platforms and interactions with sellers. Against the extant literature, we show that incumbency advantage is more unlikely to last when increasing the relative number of sellers to buyers on the incumbent platform. This is because extreme competition for buyers drives sellers and hence buyers, because of positive indirect network effects, to increasingly affiliate with the uncrowded entrant platform. We thus add to the literature by explaining how sustaining an installed base advantage is contingent on avoiding overcrowding a platform with too many sellers.
Pages/Duration: 10 pages
URI/DOI: http://hdl.handle.net/10125/41801
ISBN: 978-0-9981331-0-2
DOI: 10.24251/HICSS.2017.639
Rights: Attribution-NonCommercial-NoDerivatives 4.0 International
Appears in Collections:Managing Platforms and Ecosystems Minitrack



Items in ScholarSpace are protected by copyright, with all rights reserved, unless otherwise indicated.