Creating Platforms by Hosting Rivals | Zendy

Andrei Hagiu | Zendy; Bruno Jullien | Zendy; Julian Wright | Zendy

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Creating Platforms by Hosting Rivals

Author(s) -

Andrei Hagiu,

Bruno Jullien,

Julian Wright

Publication year - 2020

Publication title -

management science

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.954

H-Index - 255

eISSN - 1526-5501

pISSN - 0025-1909

DOI - 10.1287/mnsc.2019.3356

Subject(s) - product (mathematics) , business , core (optical fiber) , industrial organization , value (mathematics) , core product , commerce , marketing , microeconomics , economics , computer science , telecommunications , geometry , mathematics , machine learning

We explore conditions under which a multiproduct firm can profitably turn itself into a platform by "hosting rivals", i.e. by inviting rivals to sell products or services on top of its core product. Hosting eliminates the additional shopping costs to consumers of buying a specialist rival's competing version of the multiproduct firm's non-core product. On the one hand, this makes it easier for the rival to compete on the non-core product. On the other hand, hosting turns the rival from a pure competitor into a complementor: the value added by its product now helps raise consumer demand for the multi-product firm's core product. As a result, hosting can be both unilaterally profitable for the multi-product firm and jointly profitable for both firms.

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