{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,12]],"date-time":"2025-10-12T02:15:03Z","timestamp":1760235303188,"version":"build-2065373602"},"reference-count":45,"publisher":"MDPI AG","issue":"6","license":[{"start":{"date-parts":[[2021,8,18]],"date-time":"2021-08-18T00:00:00Z","timestamp":1629244800000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["JTAER"],"abstract":"<jats:p>This paper examines the dynamic competition between platform firms in two-sided markets with network externalities. In our model, two platforms compete with each other via a contest to dominate a certain market. If one platform wins the contest, it can serve the market for a certain duration as a monopolistic platform. Our paper shows that platform firms can compensate for cost disadvantages with network effects. A head start (e.g., technological advantage) does not guarantee future success for platform firms. Network effects and cost efficiency are decisive for future success. Interestingly, higher costs of a platform can induce higher platform profits in our dynamic model. Moreover, we find that a platform\u2019s size and profit are not necessarily positively correlated. Our model also provides new insights with respect to the underlying causes for the emergence of market dominance. The combination of technological carry-over and network effects can explain a long-lasting dominance of a platform that benefits from a head start. The necessary preconditions for this emergence are convex costs, small network effects and high carry-over.<\/jats:p>","DOI":"10.3390\/jtaer16060117","type":"journal-article","created":{"date-parts":[[2021,8,18]],"date-time":"2021-08-18T10:54:35Z","timestamp":1629284075000},"page":"2091-2109","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":4,"title":["A Dynamic Contest Model of Platform Competition in Two-Sided Markets"],"prefix":"10.3390","volume":"16","author":[{"given":"Martin","family":"Grossmann","sequence":"first","affiliation":[{"name":"School of Business, Lucerne University of Applied Sciences and Arts, 6002 Luzern, Switzerland"}],"role":[{"role":"author","vocabulary":"crossref"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-6837-790X","authenticated-orcid":false,"given":"Markus","family":"Lang","sequence":"additional","affiliation":[{"name":"Institute of Sport Sciences, University of Lausanne, 1015 Lausanne, Switzerland"}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Helmut M.","family":"Dietl","sequence":"additional","affiliation":[{"name":"Department of Business Administration, University of Zurich, 8006 Zurich, Switzerland"}],"role":[{"role":"author","vocabulary":"crossref"}]}],"member":"1968","published-online":{"date-parts":[[2021,8,18]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"44","DOI":"10.2202\/1446-9022.1042","article-title":"One-Sided Logic in Two-Sided Markets","volume":"3","author":"Wright","year":"2004","journal-title":"Rev. Netw. Econ."},{"key":"ref_2","doi-asserted-by":"crossref","first-page":"125","DOI":"10.1257\/jep.23.3.125","article-title":"The Economics of Two-Sided Markets","volume":"23","author":"Rysman","year":"2009","journal-title":"J. Econ. Perspect."},{"key":"ref_3","doi-asserted-by":"crossref","first-page":"1","DOI":"10.4067\/S0718-18762016000300002","article-title":"Designing Ubiquitous Media Services-Exploring the Two-Sided Market of Newspapers","volume":"11","author":"Akesson","year":"2016","journal-title":"J. Theor. Appl. Electron. Commer. Res."},{"key":"ref_4","doi-asserted-by":"crossref","first-page":"39","DOI":"10.1509\/jm.09.0199","article-title":"Multihoming in Two-Sided Markets: An Empirical Inquiry in the Video Game Console Industry","volume":"75","author":"Landsman","year":"2011","journal-title":"J. Mark."},{"key":"ref_5","unstructured":"(2021, May 01). Netflix Is Still Growing Wildly, but Its Market Share Has Fallen to an Estimated 19% as New Competitors Emerge. Available online: https:\/\/www.businessinsider.com\/netflix-market-share-of-global-streaming-subscribers-dropping-ampere-2020-1."},{"key":"ref_6","doi-asserted-by":"crossref","first-page":"100954","DOI":"10.1016\/j.elerap.2020.100954","article-title":"A 2020 Perspective on \u201cthe Race to Dominate the Mobile Payments Platform: Entry and Expansion Strategies\u201d","volume":"41","author":"Staykova","year":"2020","journal-title":"Electron. Commer. Res. Appl."},{"key":"ref_7","doi-asserted-by":"crossref","first-page":"65","DOI":"10.4067\/S0718-18762016000300006","article-title":"Adoption of Mobile Payment Platforms: Managing Reach and Range","volume":"11","author":"Staykova","year":"2016","journal-title":"J. Theor. Appl. Electron. Commer. Res."},{"key":"ref_8","doi-asserted-by":"crossref","unstructured":"Blair, R.D., and Sokol, D.D. (2014). The Antitrust Analysis of Multisided Platform Businesses. Oxford Handbook on International Antitrust Economics, Oxford University Press.","DOI":"10.2139\/ssrn.2459455"},{"key":"ref_9","doi-asserted-by":"crossref","first-page":"548","DOI":"10.1111\/joes.12362","article-title":"A Unified Presentation Of Competition Analysis In Two-Sided Markets","volume":"34","author":"Golovanova","year":"2020","journal-title":"J. Econ. Surv."},{"key":"ref_10","doi-asserted-by":"crossref","first-page":"356","DOI":"10.1287\/mksc.1070.0303","article-title":"A Two-Sided, Empirical Model of Television Advertising and Viewing Markets","volume":"27","author":"Wilbur","year":"2008","journal-title":"Mark. Sci."},{"key":"ref_11","doi-asserted-by":"crossref","first-page":"428","DOI":"10.1509\/jmkr.47.3.428","article-title":"Dynamics of Pricing in the Video Game Console Market: Skimming or Penetration?","volume":"47","author":"Liu","year":"2010","journal-title":"J. Mark. Res."},{"key":"ref_12","doi-asserted-by":"crossref","first-page":"870","DOI":"10.1287\/mksc.2016.0976","article-title":"Quantifying Cross and Direct Network Effects in Online Consumer-to-Consumer Platforms","volume":"35","author":"Chu","year":"2016","journal-title":"Mark. Sci."},{"key":"ref_13","doi-asserted-by":"crossref","first-page":"12","DOI":"10.1080\/07421222.2019.1705509","article-title":"Estimating Network Effects in Two-Sided Markets","volume":"37","author":"Hinz","year":"2020","journal-title":"J. Manag. Inform. Syst."},{"key":"ref_14","doi-asserted-by":"crossref","first-page":"645","DOI":"10.1111\/j.1756-2171.2006.tb00036.x","article-title":"Two-Sided Markets: A Progress Report","volume":"37","author":"Rochet","year":"2006","journal-title":"RAND J. Econ."},{"key":"ref_15","doi-asserted-by":"crossref","first-page":"1642","DOI":"10.1257\/aer.100.4.1642","article-title":"A Price Theory of Multi-Sided Platforms","volume":"100","author":"Weyl","year":"2010","journal-title":"Am. Econ. Rev."},{"key":"ref_16","doi-asserted-by":"crossref","first-page":"527","DOI":"10.1111\/jems.12059","article-title":"Platform Pricing Structure and Moral Hazard","volume":"23","author":"Roger","year":"2014","journal-title":"J. Econ. Manag. Strategy"},{"key":"ref_17","doi-asserted-by":"crossref","first-page":"682","DOI":"10.3390\/jtaer16040040","article-title":"Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform","volume":"16","author":"Ribeiro","year":"2021","journal-title":"J. Theor. Appl. Electron. Commer. Res."},{"key":"ref_18","doi-asserted-by":"crossref","first-page":"797","DOI":"10.1016\/S0014-2921(01)00123-4","article-title":"Competing Cybermediaries","volume":"45","author":"Caillaud","year":"2001","journal-title":"Eur. Econ. Rev."},{"key":"ref_19","doi-asserted-by":"crossref","first-page":"186","DOI":"10.1257\/mic.3.4.186","article-title":"Competition in multi-sided markets: Divide and conquer","volume":"3","author":"Jullien","year":"2011","journal-title":"Am. Econ. J. Macroecon."},{"key":"ref_20","doi-asserted-by":"crossref","first-page":"431","DOI":"10.1287\/mksc.1120.0770","article-title":"When Do Markets Tip? A Cognitive Hierarchy Approach","volume":"32","author":"Hossain","year":"2013","journal-title":"Mark. Sci."},{"key":"ref_21","doi-asserted-by":"crossref","first-page":"309","DOI":"10.2307\/1593720","article-title":"Chicken & Egg: Competition among Intermediation Service Providers","volume":"34","author":"Caillaud","year":"2003","journal-title":"RAND J. Econ."},{"key":"ref_22","doi-asserted-by":"crossref","first-page":"990","DOI":"10.1162\/154247603322493212","article-title":"Platform Competition in Two-Sided Markets","volume":"1","author":"Rochet","year":"2003","journal-title":"J. Eur. Econ. Assoc."},{"key":"ref_23","doi-asserted-by":"crossref","first-page":"668","DOI":"10.1111\/j.1756-2171.2006.tb00037.x","article-title":"Competition in Two-Sided Markets","volume":"37","author":"Armstrong","year":"2006","journal-title":"RAND J. Econ."},{"key":"ref_24","doi-asserted-by":"crossref","first-page":"768","DOI":"10.1111\/jems.12038","article-title":"Price Discrimination in Two-Sided Markets","volume":"22","author":"Liu","year":"2013","journal-title":"J. Econ. Manag. Strategy"},{"key":"ref_25","doi-asserted-by":"crossref","first-page":"507","DOI":"10.1111\/jems.12068","article-title":"Competing Platforms","volume":"23","author":"Lee","year":"2014","journal-title":"J. Econ. Manag. Strategy"},{"key":"ref_26","doi-asserted-by":"crossref","first-page":"274","DOI":"10.1111\/jems.12163","article-title":"The Role of Coordination Bias in Platform Competition","volume":"25","author":"Yehezkel","year":"2016","journal-title":"J. Econ. Manag. Strategy"},{"key":"ref_27","doi-asserted-by":"crossref","first-page":"2625","DOI":"10.1257\/aer.20181186","article-title":"Stability and Bayesian Consistency in Two-Sided Markets","volume":"110","author":"Liu","year":"2020","journal-title":"Am. Econ. Rev."},{"key":"ref_28","doi-asserted-by":"crossref","unstructured":"Konrad, K.A. (2009). Strategy and Dynamics in Contests, Oxford University Press.","DOI":"10.1093\/oso\/9780199549597.001.0001"},{"key":"ref_29","doi-asserted-by":"crossref","first-page":"329","DOI":"10.1007\/s11127-011-9905-9","article-title":"Learning by Doing in Contests","volume":"156","author":"Clark","year":"2013","journal-title":"Public Choice"},{"key":"ref_30","doi-asserted-by":"crossref","unstructured":"Grossmann, M., Lang, M., and Dietl, H.M. (2011). Transitional Dynamics in a Tullock Contest with a General Cost Function. BE J. Theor. Econ., 11.","DOI":"10.2202\/1935-1704.1795"},{"key":"ref_31","doi-asserted-by":"crossref","first-page":"401","DOI":"10.1628\/093245609789471998","article-title":"Investment Behaviour in a Two-Period Contest Model","volume":"165","author":"Grossmann","year":"2009","journal-title":"J. Inst. Theor. Econ."},{"key":"ref_32","doi-asserted-by":"crossref","first-page":"213","DOI":"10.1016\/j.geb.2004.03.004","article-title":"Contests with Multiple Rounds","volume":"51","author":"Yildirim","year":"2005","journal-title":"Games Econ. Behav."},{"key":"ref_33","doi-asserted-by":"crossref","first-page":"285","DOI":"10.1023\/A:1005003713923","article-title":"Two-Stage Rent-Seeking Contests with Carryovers","volume":"103","author":"Baik","year":"2000","journal-title":"Public Choice"},{"key":"ref_34","doi-asserted-by":"crossref","first-page":"83","DOI":"10.1080\/10168730300080006","article-title":"Two-Stage Contests with Additive Carryovers","volume":"17","author":"Lee","year":"2003","journal-title":"Int. Econ. J."},{"key":"ref_35","first-page":"20170095","article-title":"Investment on Human Capital in a Dynamic Contest Model","volume":"23","author":"Keskin","year":"2019","journal-title":"Stud. Nonlinear Dyn. Econom."},{"key":"ref_36","doi-asserted-by":"crossref","first-page":"1950017","DOI":"10.1142\/S0219198919500178","article-title":"Dynamic Contest Games with Time Delays","volume":"22","author":"Matsumoto","year":"2020","journal-title":"Int. Game Theory Rev."},{"key":"ref_37","first-page":"124909","article-title":"Dynamic Contest Model with Bounded Rationality","volume":"370","author":"Zhang","year":"2020","journal-title":"Appl. Math. Comput."},{"key":"ref_38","unstructured":"Lockard, A.A., and Tullock, G. (1980). Efficient Rent Seeking. Efficient Rent-Seeking: Chronicle of an Intellectual Quagmire, Springer US."},{"key":"ref_39","doi-asserted-by":"crossref","first-page":"283","DOI":"10.1007\/BF01213906","article-title":"Contest Success Functions","volume":"7","author":"Skaperdas","year":"1996","journal-title":"Econ. Theory"},{"key":"ref_40","doi-asserted-by":"crossref","first-page":"201","DOI":"10.1007\/s001990050184","article-title":"Contest Success Functions: An Extension","volume":"11","author":"Clark","year":"1998","journal-title":"Econ. Theory"},{"key":"ref_41","doi-asserted-by":"crossref","first-page":"841","DOI":"10.1086\/261010","article-title":"Rank-Order Tournaments as Optimum Labor Contracts","volume":"89","author":"Lazear","year":"1981","journal-title":"J. Pol. Econ."},{"key":"ref_42","first-page":"891","article-title":"Strategic Behavior in Contests","volume":"77","author":"Dixit","year":"1987","journal-title":"Am. Econ. Rev."},{"key":"ref_43","doi-asserted-by":"crossref","first-page":"101","DOI":"10.1007\/BF00153394","article-title":"Conflict and Rent-Seeking Success Functions: Ratio Vs. Difference Models of Relative Success","volume":"63","author":"Hirshleifer","year":"1989","journal-title":"Public Choice"},{"key":"ref_44","doi-asserted-by":"crossref","first-page":"1009","DOI":"10.1016\/j.ejpoleco.2005.11.006","article-title":"Total Effort, Competitive Balance and the Optimal Contest Success Function","volume":"22","author":"Runkel","year":"2006","journal-title":"Eur. J. Political Econ."},{"key":"ref_45","unstructured":"Fudenberg, D., and Tirole, J. (1991). Game Theory, The MIT Press."}],"container-title":["Journal of Theoretical and Applied Electronic Commerce Research"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/www.mdpi.com\/0718-1876\/16\/6\/117\/pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,11]],"date-time":"2025-10-11T06:46:13Z","timestamp":1760165173000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.mdpi.com\/0718-1876\/16\/6\/117"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2021,8,18]]},"references-count":45,"journal-issue":{"issue":"6","published-online":{"date-parts":[[2021,9]]}},"alternative-id":["jtaer16060117"],"URL":"https:\/\/doi.org\/10.3390\/jtaer16060117","relation":{},"ISSN":["0718-1876"],"issn-type":[{"type":"electronic","value":"0718-1876"}],"subject":[],"published":{"date-parts":[[2021,8,18]]}}}