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Medientyp:
E-Artikel
Titel:
Group Hug: Platform Competition with User Groups
Beteiligte:
Markovich, Sarit;
Yehezkel, Yaron
Erschienen:
American Economic Association, 2022
Erschienen in:
American Economic Journal: Microeconomics, 14 (2022) 2, Seite 139-175
Sprache:
Englisch
DOI:
10.1257/mic.20190372
ISSN:
1945-7669;
1945-7685
Entstehung:
Anmerkungen:
Beschreibung:
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’ 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’ utility is non-monotonic in the proportion of the group. Finally, we highlight factors that motivate the group to help the high-quality platform to win the market. (JEL D85, L14)