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Paper

Openness as Platform Strategy - Evidence from a Quasi-Experiment in Crowdfunding

MPS-Authors
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Gaessler,  Fabian
MPI for Innovation and Competition, Max Planck Society;

/persons/resource/persons187860

Pu,  Zhaoxin
MPI for Innovation and Competition, Max Planck Society;

External Resource

https://ssrn.com/abstract=3133042
(Preprint)

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Citation

Gaessler, F., & Pu, Z. (2018). Openness as Platform Strategy - Evidence from a Quasi-Experiment in Crowdfunding. Max Planck Institute for Innovation & Competition Research Paper, No. 18-05. doi:10.2139/ssrn.3133042.


Cite as: https://hdl.handle.net/21.11116/0000-0001-94BA-6
Abstract
A platform's decision to open up its marketplace is at the core of its business strategy. It needs to balance between the benefits of market thickness and the costs of potential congestion and quality concerns. We discuss how openness can increase platform value and test our hypotheses by analyzing the strategic decision of a leading crowdfunding platform to switch from access control to de facto openness. The decision increased market thickness on the previously access-controlled supply side of crowdfunding projects. The platform hereby gained market share from its main competitor. Market matches on the platform increased in absolute but not in relative terms. Moreover, quality on the supply side declined immediately, lowering platform value for demand-side users.