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Amateurs Crowds & Professional Entrepreneurs as Platform Complementors

Kevin J. Boudreau

No 24512, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Platforms often have “crowds” of amateurs working on them as complementors, in other cases professional entrepreneurs—or both. What can a platform owner do to implement these outcomes? I document evidence on mobile app developers showing that just small, incremental changes in platform design—related to the bare minimum costs required to build an app and factors affecting non-pecuniary payoffs—can lead the “bottom-to-fall-out” of the market to amateurs. Where the bottom-falls-out, there is a flood of lowest-quality developers who nonetheless are long-lived on the platform and engage in relatively high development activity. I find no evidence that amateurs crowd-out development activity of top developers in this context. Moreover, the bottom-falling-out is associated with the generation of significantly greater numbers of highest-quality products. I discuss several interpretations.

JEL-codes: D04 E26 J4 L1 L8 O3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-ind, nep-lma, nep-mac and nep-pay
Date: 2018-04
Note: PR
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