Market expanding or market stealing? : Platform competition in bike-sharing

Author / Creator

Cao, Guangyu, author

Available as

Online

Summary

The recent rise of dockless bike-sharing is dominated by two platforms: one started first in 82 Chinese cities, 59 of which were subsequently entered by the second platform. Using these variations,...

The recent rise of dockless bike-sharing is dominated by two platforms: one started first in 82 Chinese cities, 59 of which were subsequently entered by the second platform. Using these variations, we study how the entrant affects the incumbent's market performance. To our surprise, the entry expands the market for the incumbent, not only boosting its total number of trips but also allowing the incumbent to achieve higher revenue per trip, improve bike utilization rate, and form a wider and more evenly distributed network. These market expansion effects dominate a significant market-stealing effect on the incumbent's old users. Our findings suggest that platform entry can divert the perceived path to winners-take-all in a market with positive network effects, and competition with the outside goods is at least as important as the competition between platforms, especially when users multi-home across compatible networks.

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