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Market Expanding or Market Stealing? Competition with Network Effects in BikeSharing

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

Abstract

Using staggered entry of two dockless bikesharing firms, we find the entrant expands the market for the incumbent. The entry helps the incumbent to serve a greater number of trips, make more bike investment, achieve higher revenue per trip, improve bike utilization rate, and form a wider and more evenly distributed network. The market expansion effect on new users dominates a significant marketstealing effect on old users. These findings, together with a theoretical model that highlights consumer search and network effects, suggest that a market with positive network effects is not necessarily winnertakesall, especially when users multihome across compatible networks.

Suggested Citation

  • Guangyu Cao & Ginger Zhe Jin & Xi Weng & Li-An Zhou, 2018. "Market Expanding or Market Stealing? Competition with Network Effects in BikeSharing," NBER Working Papers 24938, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24938
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    Cited by:

    1. 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).
    2. 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.
    3. 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).
    4. 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.
    5. 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).
    6. Zakharenko, Roman, 2023. "Pricing shared vehicles," Economics of Transportation, Elsevier, vol. 33(C).
    7. 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).
    8. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou & Nicola Rosaia, 2020. "Search Frictions and Efficiency in Decentralized Transport Markets," Boston College Working Papers in Economics 1010, Boston College Department of Economics.
    9. Liang, Yunjia & Zhou, Bo & Zhao, Shaoyang, 2024. "Risking or de-risking? The effect of banking competition on large state-owned banks and small and medium-sized enterprise lending: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 94(C).
    10. 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.
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    12. 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.
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    14. 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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