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Private Regulation by Platform Operators – Implications for Usage Intensity

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  • Claussen, Jörg
  • Kretschmer, Tobias
  • Mayrhofer, Philip

Abstract

Platforms operators act as private regulators to increase usage and maximize profits. Their goals depend on the development of the platform: overcoming the chicken-egg problem early on requires attracting platform participants while quality becomes more important later on. Private regulators influence third-party business models, entry barriers, and usage intensity. We analyze how drivers of usage intensity on Facebook’s application platform were affected by a policy change that increased quality incentives for applications. This change led to the number of installations of each application becoming less important, applications in more concentrated sub-markets achieving higher usage, and applications staying attractive for longer.

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Paper provided by University of Munich, Munich School of Management in its series Discussion Papers in Business Administration with number 11374.

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Date of creation: May 2010
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Handle: RePEc:lmu:msmdpa:11374

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Keywords: private regulation multi-sided platforms usage intensity;

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