Platform competition and strategic trade-offs for complementors: Heterogeneous reactions to the entry of a new platform

Johannes Loh () and Ambre Elsas-Nicolle ()
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Johannes Loh: VU - Vrije Universiteit Amsterdam [Amsterdam]
Ambre Elsas-Nicolle: Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres

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Abstract: We study how the entry of a rival platform affects the strategies of the incumbent's complementors. The latter face a trade-off: While the entry threatens their benefits from indirect network effects, it also allows them to escape intense within-platform competition. Studying Epic Games' entry into the PC video game market - until then dominated by Steam - we show that this trade-off does not resolve uniformly, driving heterogeneity in strategic reactions. Complementors with weaker strategic resources (independent developers) were more likely to multihome and became less responsive to the incumbent's attempts to orchestrate collective action through platform-wide sales promotions. In contrast, complementors more reliant on indirect network effects (multiplayer developers) were less likely to multihome and became more responsive to orchestration attempts.

Keywords: Platform competition; Complementors; Multihoming; Ecosystem orchestration; Market entry (search for similar items in EconPapers)
Date: 2025-11-10
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