Migration Between Platforms
We develop a model of dynamic platform formation under positive platform externalities. Users can switch between an incumbent and entrant platforms, switching opportunities arise stochastically and users can choose whether to accept or reject an opportunity to switch. For homogeneous users, we characterize the incumbency advantage implied by a given equilibrium realization of the switching process. For linear utility, incumbency advantage increases in the mean and dispersion of the incumbentâ€™s share during the switching process, which captures the momentum and coordination of the process. Heterogeneity in preferences may lead some users to delay their switching or never switch at all. Assuming that switching opportunities arrive according to a Poisson process, users switch to the entrant platform if the average preference favors the entrant and if preferences are not too polarized.
References listed on IDEAS
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- Jack Ochs & In-Uck Park, 2005.
"Overcoming the Coordination Problem: Dynamic Formation of Networks,"
172782000000000046, UCLA Department of Economics.
- Ochs, Jack & Park, In-Uck, 2010. "Overcoming the coordination problem: Dynamic formation of networks," Journal of Economic Theory, Elsevier, vol. 145(2), pages 689-720, March.
- Ochs, Jack & Park, In-Uck, 2004. "Overcoming the Coordination Problem: Dynamic Formation of Networks," CEI Working Paper Series 2004-18, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
- Steiner, Jakub & Sakovics, Jozsef, 2008.
"Who Matters in Coordination Problems?,"
SIRE Discussion Papers
2008-27, Scottish Institute for Research in Economics (SIRE).
- E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
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