Creating platforms by hosting rivals

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info:eu-repo/semantics/altIdentifier/doi/10.1287/mnsc.2019.3356

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Andrei Hagiu et al., « Creating platforms by hosting rivals », HAL SHS (Sciences de l’Homme et de la Société), ID : 10.1287/mnsc.2019.3356


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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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