• Home
  • Search
  • Network Interconnectivity and Entry into Platform Markets
  • Cite Icon58
  • https://doi.org/10.1287/isre.2021.1010Copy DOI Icon

Network Interconnectivity and Entry into Platform Markets

Show More
  • Abstract
  • Literature Map
  • References
  • Citations
  • Similar Papers
Abstract

Digital technologies have led to the emergence of many platforms in our economy today. In certain platform networks, buyers in one market purchase services from providers in many other markets, whereas in others, buyers primarily purchase services from providers within the same market. Accordingly, network interconnectivity—which measures the degree to which consumers in one market purchase services from service providers in a different market—varies across different industries. We examine how network interconnectivity affects interactions between an incumbent platform serving multiple markets and an entrant platform seeking to enter one of these markets. Our model yields several interesting results. First, even if the entrant can advertise at no cost, it still may not want to make every user in a local market aware of its service, as doing so may trigger a competitive response from the incumbent. Second, having more mobile buyers, which increases interconnectivity between markets, can reduce the incumbent’s incentive to fight and, thus, increase the entrant’s incentive to expand. Third, stronger interconnectivity between markets may or may not make the incumbent more defensible: when advertising is not costly and mobile buyers consume in both their local markets and the markets they visit, a large number of mobile buyers will increase the entrant’s profitability, thereby making it difficult for the incumbent to deter entry. However, when advertising is costly or mobile buyers only consume in the markets they travel to, a large number of mobile buyers will help the incumbent deter entry. When advertising cost is at an intermediate level, the entrant prefers a market with moderate interconnectivity between markets. Fourth, we find that even if advanced targeting technologies can enable the entrant to also advertise to mobile buyers, the entrant may choose not to do so in order to avoid triggering the incumbent’s competitive response. Finally, we find that the presence of network effects is likely to decrease the entrant’s profit. Our results offer managerial implications for platform firms and help understand their performance heterogeneity.

Similar Papers
  • Research Article
  • Citations3

A dynamic model of the contract length and early termination: The roles of technology evolution and pricing strategy

  • Jul 10, 2023
  • Journal of Business Research
  • Yingge Qu +2
  • Research Article
  • Citations1

СУЧАСНИЙ СТАН, ПРОБЛЕМИ ТА ПЕРСПЕКТИВИ РОЗВИТКУ МОРСЬКИХ ВАНТАЖНИХ ПЕРЕВЕЗЕНЬ В УКРАЇНІ ТА СВІТІ

  • Jan 01, 2023
  • Economic Bulletin of National Technical University of Ukraine “Kyiv Polytechnic Institute”
  • Оlesia Shevchuk +1
  • Research Article
  • Citations3

СУЧАСНИЙ СТАН, ПРОБЛЕМИ ТА ПЕРСПЕКТИВИ РОЗВИТКУ МОРСЬКИХ ВАНТАЖНИХ ПЕРЕВЕЗЕНЬ В УКРАЇНІ ТА СВІТІ

  • May 08, 2023
  • Економічний вісник Національного технічного університету України «Київський політехнічний інститут»
  • Н.В Гайванович +1
  • Research Article

(За) Облачная реальность

  • Jan 29, 2020
  • Журнал «ЭКО»
  • В А Крюков
  • Research Article
  • Citations1

Font Design Optimization Model for New Media Short Video Based on Virtual Reality Digital Processing Technology

  • Sep 05, 2022
  • Computational Intelligence and Neuroscience
  • Hongwei Hu +1
  • Research Article
  • Citations1

USE OF DIGITAL TECHNOLOGIES FOR CONTROL OF KNOWLEDGE AND SKILLS OF STUDENTS

  • Dec 30, 2022
  • Zhytomyr Ivan Franko State University Journal Рedagogical Sciences
  • A Melnyk
  • Research Article
  • Citations54

Regulation of platform market access by the United States and China: Neo‐mercantilism in digital services

  • May 23, 2022
  • Policy & Internet
  • Milton L Mueller +1
  • Research Article
  • Citations3

Digital Technology Use in US Community-Dwelling Seniors With and Without Homebound Status

  • Sep 22, 2024
  • Journal of the American Medical Directors Association
  • Wenting Peng +7
  • Research Article
  • Citations8

Digital technology and human resource practices: A systematic literature review.

  • Jan 01, 2025
  • Heliyon
  • Robson Mekonnin Shiferaw +1
  • Research Article

Digital Technologies and Their Use for the Development of Cultural Heritage in Europe and Romania: Advantages and Disadvantages

  • Nov 29, 2024
  • ECONOMY AND CONTEMPORARY SOCIETY
  • Alina Cristina Niculescu +1
  • Conference Article
  • Citations8

Voltage unbalance emission assessment: Sources of contribution and their ranking

  • Sep 01, 2013
  • U. Jayatunga +3
  • PDF
  • Research Article
  • Citations1

Health care system in terms of digitalization and reforming financing

  • Nov 17, 2023
  • Analytical and Comparative Jurisprudence
  • O Muzyka-Stefanchuk +2
  • Research Article
  • Citations10

Enhancing livelihoods in farming communities through super-resolution agromet advisories using advanced digital agriculture technologies

  • Feb 17, 2023
  • Journal of Agrometeorology
  • Narayan Chandra Sarkar +8
  • PDF
  • Research Article
  • Citations7

Analysis of Digital Photography Technology in the Era of Big Data

  • Jun 15, 2022
  • Mobile Information Systems
  • Yifeng Lu +2
  • Book Chapter
  • Citations7

Digital Innovation in Healthcare Entrepreneurship

  • Jan 01, 2023
  • Ramat Mohammed-Nasir +2
Cactus Communications logo

Copyright 2026 Cactus Communications. All rights reserved.