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Market‐expanding or Market‐stealing? Competition with network effects in bike‐sharing

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  • Guangyu Cao
  • Ginger Zhe Jin
  • Xi Weng
  • Li‐An Zhou

Abstract

Using staggered entry of two dockless bike‐sharing firms, we study whether the entrant expands or steals the market from the incumbent in 59 cities. Compared with 23 cities without entry, the entry helps the incumbent to serve more trips, make more bike investment, achieve higher revenue per trip, improve bike utilization, and form a wider and more dispersed network. The market‐expanding effect on new users dominates a significant market‐stealing effect on old users. These findings, plus a theory that highlights consumer search and network effects, suggest that a market with positive network effects and multihoming users is not necessarily winner‐takes‐all.

Suggested Citation

  • Guangyu Cao & Ginger Zhe Jin & Xi Weng & Li‐An Zhou, 2021. "Market‐expanding or Market‐stealing? Competition with network effects in bike‐sharing," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 778-814, December.
    • Handle: RePEc:bla:randje:v:52:y:2021:i:4:p:778-814
    DOI: 10.1111/1756-2171.12391
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    2. Shi, Ziyi & Xu, Meng & Song, Yancun & Zhu, Zheng, 2024. "Multi-Platform dynamic game and operation of hybrid Bike-Sharing systems based on reinforcement learning," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 181(C).
    3. Junhong Chu & Yige Duan & Xianling Yang & Li Wang, 2021. "The Last Mile Matters: Impact of Dockless Bike Sharing on Subway Housing Price Premium," Management Science, INFORMS, vol. 67(1), pages 297-316, January.
    4. Xiang Hui & Meng Liu & Tat Chan, 2022. "Targeted Incentives, Broad Impacts: Evidence from an E-commerce Platform," CESifo Working Paper Series 9894, CESifo.
    5. Xiang Hui & Meng Liu & Tat Chan, 2023. "Targeted incentives, broad impacts: Evidence from an E-commerce platform," Quantitative Marketing and Economics (QME), Springer, vol. 21(4), pages 493-517, December.
    6. Fu, Chenyi & Ma, Shoufeng & Zhu, Ning & He, Qiao-Chu & Yang, Hai, 2022. "Bike-sharing inventory management for market expansion," Transportation Research Part B: Methodological, Elsevier, vol. 162(C), pages 28-54.
    7. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou & Nicola Rosaia, 2020. "Search Frictions and Efficiency in Decentralized Transportation Markets," NBER Working Papers 27300, National Bureau of Economic Research, Inc.
    8. Brancaccio, Giulia & Kalouptsidi, Myrto & Papageorgiou, Theodore, 2020. "A guide to estimating matching functions in spatial models," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    9. Zakharenko, Roman, 2023. "Pricing shared vehicles," Economics of Transportation, Elsevier, vol. 33(C).
    10. Wang, Yao & Jin, Huan & Zheng, Shiyuan & Shang, Wen-Long & Wang, Kun, 2023. "Bike-sharing duopoly competition under government regulation," Applied Energy, Elsevier, vol. 343(C).
    11. Kalouptsidi, Myrto & Brancaccio, Giulia & Papageorgiou, Theodore & Rosaia, Nicola, 2020. "Search Frictions and Efficiency in Decentralized Transport Markets," CEPR Discussion Papers 14827, C.E.P.R. Discussion Papers.
    12. Dong, Zhongpeng & Fan, Zhi-Ping & Wang, Ningning, 2023. "An analysis of pricing strategy for bike-sharing services: The role of the inconvenience cost," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    13. Fitzová, Hana & Kališ, Richard & Pařil, Vilém & Fila, Milan, 2024. "Entry and competition in the European bike-sharing industry," Transport Policy, Elsevier, vol. 149(C), pages 100-107.
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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