@article{40b570b65cc042939ca364d41fe71e26,
title = "Group Hug: Platform Competition with User Groups",
abstract = "We consider platform competition for small users and a user group. One platform enjoys a quality advantage and the other benefits from favorable beliefs. We study whether the group mitigates the users{\textquoteright} coordination problem—i.e., joining a low-quality platform because they believe that other users would do the same. We find that a group that can facilitate coordination on the high-quality platform may choose to maintain the dominance of the low-quality one. Users{\textquoteright} utility is non-monotonic in the proportion of the group.",
author = "Sarit Markovich and Yaron Yehezkel",
note = "Funding Information: * Markovich: Kellogg School of Management, Northwestern University (email: s-markovich@kellogg. northwestern.edu); Yehezkel: Coller School of Management, Tel Aviv University (email: yehezkel@tauex.tau. ac.il). Leslie Marx was coeditor for this article. For helpful comments and discussions, we thank Gary Biglaiser, Toker Doganoglu, Bruno Jullien, Massimo Motta, Maher Said, Yossi Spiegel, Mark Tremblay, and three anonymous referees, as well as seminar participants at the Bergamo 2018 Workshop on Advances in Industrial Organization, the St. Gallen 2018 IO Workshop, the 2019 Paris Conference on Digital Economics, the 2019 IIOC in Boston, the CRESSE 2019 in Rhodes, the 2019 EARIE conference in Barcelona, and the 2019 NET Institute Conference. For financial support, we thank the Coller Foundation, the NET Institute (www.NETinst.org), the Henry Crown Institute, and the Eli Hurvitz Institute for Strategic Management. Publisher Copyright: {\textcopyright} 2022, American Economic Journal: Microeconomics.All Rights Reserved.",
year = "2022",
doi = "10.1257/mic.20190372",
language = "English (US)",
volume = "14",
pages = "139--175",
journal = "American Economic Journal: Microeconomics",
issn = "1945-7669",
publisher = "American Economic Association",
number = "2",
}