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Market‐expanding or Market‐stealing? Competition with network effects in bike‐sharing
Author(s) -
Cao Guangyu,
Jin Ginger Zhe,
Weng Xi,
Zhou LiAn
Publication year - 2021
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12391
Subject(s) - multihoming , trips architecture , competition (biology) , business , bike sharing , investment (military) , revenue , network effect , market share , industrial organization , market size , microeconomics , marketing , economics , commerce , transport engineering , finance , computer science , the internet , engineering , political science , ecology , internet protocol , world wide web , politics , law , biology
Using staggered entry of two dockless bike‐sharing firms, we study whether the entrant expands or steals the market from the incumbent in 59 cities. Compared with 23 cities without entry, the entry helps the incumbent to serve more trips, make more bike investment, achieve higher revenue per trip, improve bike utilization, and form a wider and more dispersed network. The market‐expanding effect on new users dominates a significant market‐stealing effect on old users. These findings, plus a theory that highlights consumer search and network effects, suggest that a market with positive network effects and multihoming users is not necessarily winner‐takes‐all.