publication . Preprint . Article . 2012

Two-Sided Platform Competition in the Online Daily Deals Promotion Market

Byung-Cheol Kim; Jeongsik Lee; Hyunwoo Park;
Open Access
  • Published: 01 Sep 2012
Abstract
We empirically investigate the platform competition in the online daily deals promotion market that is characterized by intense rivalry between two leading promotion sites, Groupon and LivingSocial, that broker between merchants and consumers. We find that deals offered through Groupon, the incumbent, sell more and generate higher revenues than those offered by LivingSocial, the entrant. We show that the greater network size in the consumer side entirely explains the incumbent's lead in the merchant side performance, indicating the existence of cross-side network effects at the aggregated market level. However, this performance advantage is dampened by the entra...
Subjects
free text keywords: two-sided market, platform competition, cross-side network effects, online daily deals, reputation effect, jel:D40, jel:L10, jel:M20, Network effect, Commerce, Business, Network size, Rivalry, Revenue, Market structure, Two-sided market
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publication . Preprint . Article . 2012

Two-Sided Platform Competition in the Online Daily Deals Promotion Market

Byung-Cheol Kim; Jeongsik Lee; Hyunwoo Park;