IDEAS home Printed from https://ideas.repec.org/a/eee/iepoli/v41y2017icp36-53.html
   My bibliography  Save this article

Two-sided platform competition with multihoming agents: An empirical study on the daily deals market

Author

Listed:
  • Kim, Byung–Cheol
  • Lee, Jeongsik “Jay”
  • Park, Hyunwoo

Abstract

The Internet and mobile revolutions gave birth to many information-based platforms that have low entry costs with highly imitable business models. Exploiting granular deal-level data, we empirically study the U.S. daily deals promotion market, characterized by frequent multihoming of consumers and merchants leading to intense competition in over 150 regional markets between two major platforms, Groupon and LivingSocial. Consistent with the competitive pressure due to prevalent multihoming on the consumer side, we find little inter-platform difference in deal terms such as discount rate, price and value offered to consumers. On the merchant side, merchants that performed worse in the first promotion were more likely to switch to a competing platform for the next promotion. However, such platform switching brought little improvement in coupon sales in the subsequent promotion, particularly when the merchant switched from the market leader to a newer platform. Being first in a regional market provided an advantage to the platform in coupon sales, but that advantage quickly attenuated as promotions were repeated. Thus, in the presence of multihoming agents, the daily deal platforms appear to find it difficult to create a competitive bottleneck in either side of the market. The insight from our findings can be extended to other infomediary platform markets.

Suggested Citation

  • Kim, Byung–Cheol & Lee, Jeongsik “Jay” & Park, Hyunwoo, 2017. "Two-sided platform competition with multihoming agents: An empirical study on the daily deals market," Information Economics and Policy, Elsevier, vol. 41(C), pages 36-53.
    • Handle: RePEc:eee:iepoli:v:41:y:2017:i:c:p:36-53
    DOI: 10.1016/j.infoecopol.2017.06.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167624516300907
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.infoecopol.2017.06.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Heiko Karle & Martin Peitz & Markus Reisinger, 2020. "Segmentation versus Agglomeration: Competition between Platforms with Competitive Sellers," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2329-2374.
    2. Kim, Suwon, 2018. "Snack-media platform market segmentation based on user heterogeneity: A Q-methodology approach," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190357, International Telecommunications Society (ITS).
    3. Mark J. Tremblay, 2019. "Platform Competition and Endogenous Switching Costs," Journal of Industry, Competition and Trade, Springer, vol. 19(4), pages 537-559, December.
    4. Sebastian Wai, 2022. "Software quality and backward compatibility in the video game industry," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 545-570, September.
    5. Hui Li & Feng Zhu, 2021. "Information Transparency, Multihoming, and Platform Competition: A Natural Experiment in the Daily Deals Market," Management Science, INFORMS, vol. 67(7), pages 4384-4407, July.

    More about this item

    Keywords

    Platform competition; Two-sided markets; Online daily deals; Multihoming;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:41:y:2017:i:c:p:36-53. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505549 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.