Private Regulation by Platform Operators – Implications for Usage Intensity

Jörg Claussen, Tobias Kretschmer and Philip Mayrhofer

Discussion Papers in Business Administration from University of Munich, Munich School of Management

Abstract: Platforms operators act as private regulators to increase usage and maximize profits. Their goals depend on the development of the platform: overcoming the chicken-egg problem early on requires attracting platform participants while quality becomes more important later on. Private regulators influence third-party business models, entry barriers, and usage intensity. We analyze how drivers of usage intensity on Facebook’s application platform were affected by a policy change that increased quality incentives for applications. This change led to the number of installations of each application becoming less important, applications in more concentrated sub-markets achieving higher usage, and applications staying attractive for longer.

Keywords: private; regulation; multi-sided; platforms; usage; intensity (search for similar items in EconPapers)
JEL-codes: L1 L50 O33 (search for similar items in EconPapers)
Date: 2010-05
New Economics Papers: this item is included in nep-reg
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