Platform Competition and Online Communities: Evidence from Game Wikis

Tobias Kretschmer and Johannes Loh

No 16107, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Many digital platforms rely on the contributions of volunteer communities for collaborative value creation and ultimately competitive advantage. Thus, (unpaid) contributors are a valuable resource for the platform, but control over their activities is limited and lock-in to any particular platform is uncertain, especially if there are competing platforms. We explore how contributor behavior depends on a platform’s competitive position and argue that contributor behavior is driven by two mechanisms: First, a higher level of platform dominance reduces issues of contributor coordination affecting the size of the active community, the extensive margin of value creation. Second, a platform’s competitive position is also related to contributor motivation through the non-pecuniary benefits contributors derive, which affects how much individuals contribute, the intensive margin of value creation. We study two competing game wiki platforms using game updates as a source of exogenous variation and find that a platform’s more dominant position is associated with higher overall levels of contributor activity, which is primarily driven by the extensive margin of value creation. This creates higher social benefits, which in turn leads to increased activity at the intensive margin. We find that most of this effect comes from high-productivity contributors on a more dominant platform.

Date: 2021-05
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