IDEAS home Printed from https://ideas.repec.org/a/spr/jeicoo/v17y2022i4d10.1007_s11403-022-00351-y.html
   My bibliography  Save this article

A bottom-up simulation on competition of online interpersonal communication platforms

Author

Listed:
  • Tao Fu

    (Beijing University of Technology)

  • Liling Zou

    (Beijing University of Technology)

Abstract

The competition of interpersonal communication platforms is a complex process affected by various factors. This paper aims to simulate and analyze this process from a bottom-up perspective. Individual platform selection serves as the micro-foundation for the study. The evolution of online interpersonal communication networks, and innovations proposed by online interpersonal communication platforms, would also impact this process by affecting individual selection on those platforms. Three scenarios were designed for this study to simulate typical modes of competition. In this regard, the simulation results were compared to practical cases. Taken together, this bottom-up simulation model could reproduce and anticipate the applied competition process associated with such platforms. Based on this model, it was found that, in any case, one online interpersonal communication platform will eventually monopolize the market, either partly or entirely. The late entrant platform, comprising a major innovation, tends to fail when competing with the incumbent monopoly due to “network externalities.” Even when two competing platforms continue to propose innovations, and they will alternately lead the competition due to those innovations, this type of replacement of their competitive positions in the market may only occur a few times and then disappear completely.

Suggested Citation

  • Tao Fu & Liling Zou, 2022. "A bottom-up simulation on competition of online interpersonal communication platforms," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(4), pages 897-925, October.
    • Handle: RePEc:spr:jeicoo:v:17:y:2022:i:4:d:10.1007_s11403-022-00351-y
    DOI: 10.1007/s11403-022-00351-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11403-022-00351-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11403-022-00351-y?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.

    References listed on IDEAS

    as
    1. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    2. Jeffrey Rohlfs, 1974. "A Theory of Interdependent Demand for a Communications Service," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 16-37, Spring.
    3. Justus Haucap & Ulrich Heimeshoff, 2014. "Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?," International Economics and Economic Policy, Springer, vol. 11(1), pages 49-61, February.
    4. Tao Fu & Chenguang Li & Liping Guo & Yanni Wang, 2015. "How we view competitions between the converging Internet social platforms: Does higher user number mean the final victory?," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 26(08), pages 1-16.
    5. Li, Shu-Chu & Chen, Yen-Shen & Ku, Linlin, 2017. "A Niche Analysis of Three Interpersonal Communication Technologies: Examining the Competition among Facebook, Line, and Email," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168514, International Telecommunications Society (ITS).
    6. Bruno Jullien, 2005. "Two-sided Markets and Electronic Intermediaries," CESifo Economic Studies, CESifo Group, vol. 51(2-3), pages 233-260.
    7. John Dimmick & Yan Chen & Zhan Li, 2004. "Competition Between the Internet and Traditional News Media: The Gratification-Opportunities Niche Dimension," Journal of Media Economics, Taylor & Francis Journals, vol. 17(1), pages 19-33.
    8. Xiaoming Yang & Sunny Li Sun & Ruby P. Lee, 2016. "Micro-Innovation Strategy: The Case of WeChat," Asian Case Research Journal (ACRJ), World Scientific Publishing Co. Pte. Ltd., vol. 20(02), pages 401-427, December.
    9. Claire Borsenberger, 2015. "The Concentration Phenomenon in E-commerce," Topics in Regulatory Economics and Policy, in: Michael A. Crew & Timothy J. Brennan (ed.), Postal and Delivery Innovation in the Digital Economy, edition 127, pages 31-41, Springer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Justus Haucap & Ulrich Heimeshoff, 2014. "Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?," International Economics and Economic Policy, Springer, vol. 11(1), pages 49-61, February.
    2. Cong Gu & Benfu Lv & Geng Peng, 2022. "Google and Alibaba s Different Stock Performances after Antitrust Investigations, the Reasons and Enlightenment," International Journal of Economics and Financial Issues, Econjournals, vol. 12(2), pages 26-36, March.
    3. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    4. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters, in: Johannes M. Bauer & Michael Latzer (ed.), Handbook on the Economics of the Internet, chapter 9, pages 183-210, Edward Elgar Publishing.
    5. Justus Haucap, 2019. "Competition and Competition Policy in a Data-Driven Economy," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 201-208, July.
    6. David S. Evans & Richard Schmalensee, 2005. "The economics of interchange fees and their regulation : an overview," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, issue May, pages 73-120.
    7. Veiga, André, 2018. "A note on how to sell a network good," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 114-126.
    8. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    9. Shihui Tian & Guowei Hua & T. C. E. Cheng, 2019. "Optimal Deployment of Charging Piles for Electric Vehicles Under the Indirect Network Effects," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(01), pages 1-17, February.
    10. Paul Belleflamme & Eric Toulemonde, 2009. "Negative Intra-Group Externalities In Two-Sided Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 245-272, February.
    11. Tsuyoshi Toshimitsu, 2023. "A start-up problem in a pure network good market and the role of a stand-alone effect with a monopoly: A revisit of Rohlfs (1974, 2001)," Economics Bulletin, AccessEcon, vol. 43(3), pages 1434-1443.
    12. Henseler, Marco, 2006. "Horizontal versus Vertical Electronic Business-to-Business Marketplaces," MPRA Paper 40853, University Library of Munich, Germany.
    13. Martin Peitz, 2006. "Marktplätze und indirekte Netzwerkeffekte," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(3), pages 317-333, August.
    14. DongJoon Lee & Kangsik Choi & Tatsuhiko Nariu, 2020. "Endogenous vertical structure with network externalities," Manchester School, University of Manchester, vol. 88(6), pages 827-846, December.
    15. Jan KRÄMER & Michael WOHLFARTH, 2015. "Regulating Over-the-Top Service Providers in Two-Sided Content Markets: Insights from the Economic Literature," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(99), pages 71-90, 3rd quart.
    16. Aoyagi, Masaki, 2018. "Bertrand competition under network externalities," Journal of Economic Theory, Elsevier, vol. 178(C), pages 517-550.
    17. Marc Rysman, 2007. "An Empirical Analysis Of Payment Card Usage," Journal of Industrial Economics, Wiley Blackwell, vol. 55(1), pages 1-36, March.
    18. Junic Kim & Jaewook Yoo, 2019. "Platform Growth Model: The Four Stages of Growth Model," Sustainability, MDPI, vol. 11(20), pages 1-16, October.
    19. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    20. Krämer, Jan & Wohlfarth, Michael, 2018. "Market power, regulatory convergence, and the role of data in digital markets," Telecommunications Policy, Elsevier, vol. 42(2), pages 154-171.

    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:spr:jeicoo:v:17:y:2022:i:4:d:10.1007_s11403-022-00351-y. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.