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The Role of Quantitative and Qualitative Network Effects in B2B Platform Competition
Author(s) -
Li Zhiwen,
Penard Thierry
Publication year - 2014
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2602
Subject(s) - competition (biology) , quality (philosophy) , business , industrial organization , set (abstract data type) , network effect , marketing , market share , microeconomics , economics , computer science , ecology , philosophy , epistemology , biology , programming language
This article aims at investigating how quantitative and qualitative (indirect) network effects impact pricing and trading decisions on a Business‐to‐Business marketplace. Using an original data set collected on MFG.com, one of the most prominent B2B platforms in the U.S.A., we find that the market share of a marketplace depends on both the quantity and quality of suppliers, but that quality effects tend to substitute for quantity effects as the size of the marketplace increases. These results suggest that while the quantity of suppliers on board is crucial during the early stage of a marketplace, supplier quality matters much more in the mature stage. Copyright © 2013 John Wiley & Sons, Ltd.