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The Role of Quantitative and Qualitative Network Effects in B2B Platform Competition

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  • Zhiwen Li
  • Thierry Penard

Abstract

This article aims at investigating how quantitative and qualitative (indirect) network effects impact pricing and trading decisions on a Business-to-Business marketplace. Using an original data set collected on MFG.com, one of the most prominent B2B platforms in the U.S.A., we find that the market share of a marketplace depends on both the quantity and quality of suppliers, but that quality effects tend to substitute for quantity effects as the size of the marketplace increases. These results suggest that while the quantity of suppliers on board is crucial during the early stage of a marketplace, supplier quality matters much more in the mature stage.
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  • Zhiwen Li & Thierry Penard, 2014. "The Role of Quantitative and Qualitative Network Effects in B2B Platform Competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(1), pages 1-19, January.
    • Handle: RePEc:wly:mgtdec:v:35:y:2014:i:1:p:1-19
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    File URL: http://hdl.handle.net/10.1002/mde.2602
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    Cited by:

    1. Gary Dushnitsky & Evila Piva & Cristina Rossi‐Lamastra, 2022. "Investigating the mix of strategic choices and performance of transaction platforms: Evidence from the crowdfunding setting," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 563-598, March.
    2. Özelkan, Ertunga C. & Lim, Churlzu & Adnan, Ziaul Haq, 2018. "Conditions of reverse bullwhip effect in pricing under joint decision of replenishment and pricing," International Journal of Production Economics, Elsevier, vol. 200(C), pages 207-223.
    3. He, Wei & Li, Mingzhi & Zheng, Jie, 2023. "Switching cost, network externality and platform competition," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 428-443.
    4. Soichiro Takagi, 2020. "Literature survey on the economic impact of digital platforms," International Journal of Economic Policy Studies, Springer, vol. 14(2), pages 449-464, August.
    5. Zhongqi Deng & Yu Zhang & Ao Yu, 2020. "The New Economy in China: An Intercity Comparison," SAGE Open, , vol. 10(4), pages 21582440209, December.

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