Superstar effects in a platform-based local market: The role of customer usage of online-to-offline platforms and spatial agglomeration

Jing Chen, Xing Wan () and Jing Yang
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Jing Chen: Nanjing University of Finance and Economics
Xing Wan: Nanjing University of Finance and Economics
Jing Yang: Nanjing University of Finance and Economics

Electronic Markets, 2023, vol. 33, issue 1, No 43, 16 pages

Abstract: Abstract In the Internet economy, digital platforms have become vital information and business infrastructure and reshaped the competition environment. Online-to-offline (O2O) platforms that link consumers’ online searches with offline consumption through purchases from local physical stores have become popular in the digital era. This paper studies the impact of a service firm’s decisions on product concentration on its performance in a platform-based local market. Informed by the infomediary role of digital platforms and the agglomeration theory, we theorize the roles of customer usage of digital platforms and spatial agglomeration in shaping the relationship between product concentration and firm performance. We look at data from China’s movie theater industry, in which the majority of movie theaters have joined O2O platforms, and we find that theaters’ movie concentrations have a significant positive impact on their revenues. The positive relationship is the weakest when customer usage of O2O platforms is medium and is comparatively stronger when the demand-side usage of O2O platforms is low or high. When spatial agglomeration is higher, the positive relationship is weaker. Theoretical and practical implications of the study are discussed.

Keywords: Product concentration; Online-to-offline platforms; Customer usage; Movie theater industry; Spatial agglomeration (search for similar items in EconPapers)
JEL-codes: M1 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12525-023-00661-4

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