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dc.contributor.authorZhu, Feng
dc.contributor.authorLi, Xinxin
dc.contributor.authorValavi, Ehsan
dc.contributor.authorIansiti, Marco
dc.date.accessioned2023-09-28T13:33:51Z
dc.date.issued2021-09
dc.identifier.citationZhu, Feng, Xinxin Li, Ehsan Valavi, and Marco Iansiti. "Network Interconnectivity and Entry into Platform Markets." Information Systems Research 32, no. 3 (September 2021): 1009–1024.en_US
dc.identifier.issn1047-7047en_US
dc.identifier.urihttps://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37377133*
dc.description.abstractDigital 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.en_US
dc.language.isoen_USen_US
dc.publisherInstitute for Operations Research and the Management Sciences (INFORMS)en_US
dc.relation.isversionofhttps://doi.org/10.1287/isre.2021.1010en_US
dash.licenseOAP
dc.subjectLibrary and Information Sciencesen_US
dc.subjectInformation Systems and Managementen_US
dc.subjectComputer Networks and Communicationsen_US
dc.subjectInformation Systemsen_US
dc.subjectManagement Information Systemsen_US
dc.titleNetwork Interconnectivity and Entry into Platform Marketsen_US
dc.typeJournal Articleen_US
dc.description.versionAccepted Manuscripten_US
dc.relation.journalInformation Systems Researchen_US
dash.depositing.authorZhu, Feng
dc.date.available2023-09-28T13:33:51Z
dc.identifier.doi10.1287/isre.2021.1010
dash.source.volume32en_US
dash.source.page1009-1024en_US
dash.source.issue3en_US
dash.contributor.affiliatedIansiti, Marco
dash.contributor.affiliatedZhu, Feng


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