Competition in Platform Ecosystems and Digital Markets
Manav Raj is a doctoral candidate in the Management & Organizations Department at NYU Stern. His research studies how firms respond to innovation and technological change, with a focus on digital platforms and technologies.
Following the introduction of the Internet in the 1990s, platform markets have grown in size and prevalence over the last three decades. Such platforms connect producers and consumers, enabling greater exchange but changing the nature of competition for the firms participating in these markets. In my dissertation, I build and test theory regarding competition and market dynamics on digital platforms.
On digital platforms, provider expansion draws consumer attention to a product market area on the platform, and the reduced cost of consumer search and consumption may then facilitate a spillover of demand from the provider to a peer. A priori, it is unclear when positive demand spillovers across peers may outweigh the negative effects of substitution on digital platforms.
I consider how provider characteristics moderate the balance between demand spillovers and substitution on a digital platform. Using daily data from the top 10,000 artists on the Spotify platform, I study the effect of peer expansion on provider performance and consider when demand spillovers outweigh substitution across providers on a digital platform. I find that, on average, peer expansion improves provider performance on the platform, however provider characteristics moderate this effect. Expansion by a popular peer generates demand spillovers that overcome the effect of substitution and improve provider performance, while expansion by a less popular peer does not. I show that platform recommendations magnify spillovers and that the market dynamics on platforms may have strategic implications for when artists release their own albums.
In additional studies that are currently in progress, I further explore how digital platforms have affected competitive dynamics using the restaurant industry as an empirical setting. In the second essay, I examine how the penetration of delivery platforms into local geographies affects firm survival using establishment-level restaurant data. In the third chapter, I examine how platforms can serve as an alternative distribution channel for providers during moments of crises. Through this research, I integrate literature in digital economics with extant research in strategy to better develop our understanding of firm performance, strategy, and competition in platform ecosystems and digital markets.
