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Platform Competition and Incumbency Advantage under Heterogeneous Lock-in effects
Information Economics and Policy ( IF 2.769 ) Pub Date : 2023-05-23 , DOI: 10.1016/j.infoecopol.2023.101031
Emanuele Giovannetti , Paolo Siciliani

Digital platform markets perform a myriad of daily transactions, providing internet-mediated exchange possibilities: between consumers, for peer-to-peer exchanges; between businesses, for digital value chains; and between businesses and consumers, in digital marketplaces. It is essential for competition that new entrants are able to join platform markets. However, these markets are often characterised by proprietary innovations, especially in data analytics applied to existing user data. The algorithmic analysis of user data and information might increase incumbency advantages, creating lock-in effects among users and making them more reluctant to join an entrant platform. The individual costs of these lock-in effects may differ between the sides of a platform, e.g., between sellers and buyers, and across users within each side, e.g., between sellers with different costs and/or propensities to join an entrant platform. Moreover, these costs will interact with cross-group network effects, another well-studied source of incumbency advantage. This paper develops a model exploring how different levels of lock-in effects may favour an incumbent platform. The conditions for platforms’ coexistence, to avoid market tipping, require lock-in effects to be "stronger" than cross-group effects. However, this condition also provides a market advantage to the incumbent platform compared to the entrant's. Therefore, policies aimed at reducing lock-in effects, such as mandating data portability, may counterintuitively impair entry conditions as the incumbent sets its prices more aggressively with lower lock-in effects.



中文翻译:

异质锁定效应下的平台竞争与在位优势

数字平台市场进行大量的日常交易,提供以互联网为媒介的交易可能性:在消费者之间进行点对点交易;企业之间,数字价值链;以及在数字市场中的企业和消费者之间。新进入者能够加入平台市场对竞争至关重要。然而,这些市场通常以专有创新为特征,尤其是在应用于现有用户数据的数据分析方面。对用户数据和信息的算法分析可能会增加在职优势,在用户中产生锁定效应,使他们更不愿意加入新进入的平台。这些锁定效应的个体成本可能在平台的双方之间不同,例如,在卖家和买家之间,以及在每一方的用户之间,例如,具有不同成本和/或加入进入者平台倾向的卖家之间。此外,这些成本将与跨集团网络效应相互作用,这是另一个经过充分研究的在职优势来源。本文开发了一个模型,探索不同级别的锁定效应如何有利于现有平台。平台共存的条件,为避免市场倾斜,要求锁定效应比跨组效应“更强”。然而,与进入者的平台相比,这种情况也为现有平台提供了市场优势。因此,旨在减少锁定效应的政策(例如强制数据可移植性)可能会违反直觉地削弱进入条件,因为在位者以更低的锁定效应更积极地设定价格。

更新日期:2023-05-23
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