Decomposing the Congestion Effect and the Cross-Platform Effect in Two-Sided Networks: A Field Experiment

Competition Policy and Antitrust and Networks, the Internet, and Cloud Computing

Article Snapshot

Author(s)

Catherine Tucker and Juanjuan Zhang

Source

NET Institute Working Paper #08-12, September 2008

Summary

Analyzes the marketing technique of providing information about user participation in a two-sided exchange network.

Policy Relevance

This paper is extremely helpful to those businesses that operate in two-sided exchange networks (such as eBay or Craigslist), because it provides analysis on how providing information affects company growth. This paper is also helpful to policy makers who are interested in regulating marketing and information dissemination. After reviewing this paper, policy makers will gain understanding of how regulation would affect these types of businesses' health.

Main Points

  • The results from experimental data used by this paper suggest that information on the number of users can be an effective tool to grow two-sided networks, but should be used strategically because many variables can come into play that affect the results of different information dissemination strategies.

 

  • The experimental data used is field experimental data from a B2B website that brings together buyers and sellers of used equipment and real estate. Before each seller made a posting request, the website randomized whether to disclose the number of buyers and/or sellers, and the exact number to disclose.
     

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