Abstract
The strategic use of first-party content by two-sided platforms is driven by two key factors: the nature of buyer and seller expectations (favorable versus unfavorable) and the nature of the relationship between first-party content and third-party content (complements or substitutes). Platforms facing unfavorable expectations face an additional constraint: their prices and first-party content investment need to be such that low (zero) participation equilibria are eliminated. This additional constraint typically leads them to invest more (less) in first-party content relative to platforms facing favorable expectations when first- and third-party content are substitutes (complements). These results hold with both simultaneous and sequential entry of the two sides. With two competing platforms-incumbent facing favorable expectations and entrant facing unfavorable expectations- and multi-homing on one side of the market, the incumbent always invests (weakly) more in first-party content relative to the case in which it is a monopolist.
Original language | English (US) |
---|---|
Pages (from-to) | 933-949 |
Number of pages | 17 |
Journal | Management Science |
Volume | 59 |
Issue number | 4 |
DOIs | |
State | Published - Apr 1 2013 |
Keywords
- First-party content
- Platform strategy
- Technology
- Two-sided platforms
ASJC Scopus subject areas
- Strategy and Management
- Management Science and Operations Research