Competition in Digital Markets: Role of Data and Network

Abstract

This dissertation studies how resources like proprietary data or market factors such as network interconnectivity influence the barrier to entry into digital markets, and analyzes their impact on the competitiveness and growth of digital firms.

Network interconnectivity measures the degree to which consumers in one market purchase products and services from the providers in a different market. In chapter 2, in the context of digital platforms, I examine how such network interconnectivity affects interactions between an incumbent firm serving in multiple markets and an entrant seeking to enter one of these markets.

Chapter 3 investigates the role of data, as a critical resource for digital firms, in creating barriers to entry of competitors. In this chapter, I mainly study how data perishability, which measures the loss in the value of data over time in dynamically changing environments, influences the barrier to entry and, thereby, the competitiveness of an incumbent firm.

Finally, chapter 4 proposes a framework to measure the data perishability rate in various business contexts. The proposed method uses user-generated text data from Reddit.com and estimates the loss in the value of text data to the algorithmic prediction of conversations over time. In this chapter, I argue that the measurement is correlated with the speed of change (and how fast data loses its value) in various business areas.