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Market Expanding or Market Stealing? Platform Competition in Bike-Sharing

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  • Guangyu Cao
  • Ginger Zhe Jin
  • Li-An Zhou

Abstract

The recent rise of dockless bike-sharing is dominated by two platforms: one started first in 82 Chinese cities, 59 of which were subsequently entered by the second platform. Using these variations, the paper studies how the entrant affects the incumbent’s market performance. To our surprise, the entry expands the market for the incumbent, not only boosting its total number of trips but also allowing the incumbent to achieve higher revenue per trip, improve bike utilization rate, and form a wider and more evenly distributed network. These market expansion effects dominate a significant market-stealing effect on the incumbent’s old users. The findings suggest that platform entry can divert the perceived path to winners-take-all in a market with positive network effects, and competition with the outside goods is at least as important as the competition between platforms, especially when users multi-home across compatible networks.

Suggested Citation

  • Guangyu Cao & Ginger Zhe Jin & Li-An Zhou, 2018. "Market Expanding or Market Stealing? Platform Competition in Bike-Sharing," Working Papers id:12907, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12907
    Note: Institutional Papers
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    Cited by:

    1. Junhong Chu & Yige Duan & Xianling Yang & Li Wang, 2021. "The Last Mile Matters: Impact of Dockless Bike Sharing on Subway Housing Price Premium," Management Science, INFORMS, vol. 67(1), pages 297-316, January.

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