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Platform launch in two-sided markets and users’ expectations

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  • Geng, Yang
  • Zhang, Yulin

Abstract

This paper analyzes the effect of users’ expectations on the dynamic process of users’ subscriptions based on the Bass model. We find that in all cases, the platform can make a successful launch if and only if the initial point is above the critical trajectory. If the probability that users on one side base their expectations on the number of subscribers on the same side is high, the launch of the platform will be easier when platform managers give priority to attracting users on this side. In addition, users’ expectations cannot change ex post equilibria when users are rational. However, if users on one side have pessimistic expectations, a high growth rate on this side makes it harder for the platform to launch.

Suggested Citation

  • Geng, Yang & Zhang, Yulin, 2020. "Platform launch in two-sided markets and users’ expectations," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 558(C).
    • Handle: RePEc:eee:phsmap:v:558:y:2020:i:c:s037843712030515x
    DOI: 10.1016/j.physa.2020.124987
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