Study of bilateral trading platform competition in consideration of suppliers’ spatial network

Yan Xu (), Xiaobo Tao and Yongbo Sun ()
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Yan Xu: Economics and Management School, North China University of Technology, No. 5, Jinyuanzhuan Road, Shijingshan District, Beijing 100144, P. R. China
Xiaobo Tao: Economics and Management School, North China University of Technology, No. 5, Jinyuanzhuan Road, Shijingshan District, Beijing 100144, P. R. China
Yongbo Sun: Business School, Beijing Technology and Business University, No. 11/33, Fucheng Road, Haidian District, Beijing 100048, P. R. China

International Journal of Modern Physics C (IJMPC), 2018, vol. 29, issue 05, 1-15

Abstract: The bilateral trading platform is an intermediary system which serves both consumers and suppliers. To make this happen, platforms must attract users on board from both sides and make them trade with each other. Spatial distribution of suppliers has the significant impact on consumers platform adoption decision, but how does the supplier’s network affect the platform competition has rarely been studied. In this paper, the supplier’s spatial network is added to bilateral trading platform network effect model, and influences of the supplier’s network structure on the platform competition are discussed. Simulation results show that, compared with the central network, the decentralized network is more conducive to the platform competition. When suppliers on two competitive platforms follow the same network structure, the reinforcement effect of the first-mover advantage on platforms will vanish. This result is robust in different spatial network patterns. Conversely, when one of the platforms has a superior network structure of suppliers, its first-mover advantage will get strengthened, and it will achieve a better competition result; otherwise, its first-mover advantage will get weakened. These results provide an insight into the platform competition mechanism and will help platforms to make corresponding competitive strategies.

Keywords: Bilateral trading platform; spatial network; cross network effects; platform competition (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S012918311840003X

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