Competing Matchmakers: An Experimental Analysis

Platform competition is ubiquitous, yet platform market structure is little understood. Theory models typically suffer from equilibrium multiplicity-platforms might coexist or the market might tip to either platform. We use laboratory experiments to study the outcomes of platform competition. When p...

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Bibliographic Details
Published in:Management science 2011-11, Vol.57 (11), p.1913-1925
Main Authors: Hosasain, Tanjim, Minor, Dylan, Morgan, John
Format: Article
Language:English
Subjects:
Applied sciences
Auctions
Competition
Competition (Economics)
Dating services
e-commerce
Ecological competition
Economic competition
Economic conditions
Economic theory
Economics
Electronic commerce
Empirical research
Empirical tests
Equilibrium
Exact sciences and technology
Experiments
Fees
Financial risk
General aspects
Internet
Laboratories
Management
Management science
Market share
Market shares
Market structure
Monopolies
monopoly
Nash equilibrium
Online dating
Platform
platform competition
Search engines
Studies
Telecommunications industry
two-sided markets
U.S.A
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Summary:Platform competition is ubiquitous, yet platform market structure is little understood. Theory models typically suffer from equilibrium multiplicity-platforms might coexist or the market might tip to either platform. We use laboratory experiments to study the outcomes of platform competition. When platforms are primarily vertically differentiated, we find that even when platform coexistence is theoretically possible, markets inevitably tip to the more efficient platform. When platforms are primarily horizontally differentiated, so there is no single efficient platform, we find strong evidence of equilibrium coexistence. This paper was accepted by Peter Wakker, decision analysis.
ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.1110.1407