Myopic expansions on platforms: Evidence from mobile application markets

Publication Type

Journal Article

Publication Date

7-2024

Abstract

The literature on market design and multisided platforms focuses primarily on the positive impact of resolving market frictions on the aggregate market size and efficiency. In this paper, we argue that extensive resolution of market frictions associated with market entry on multisided platforms can nudge platform participants to overlook the heterogeneous nature of different markets and, consequently, to engage in large-scale, myopic market expansions. These expansions, in turn, can lead to lower customer satisfaction and performance. We test our arguments in the context of Apple's App Store. We find that app developers’ large-scale market expansions increase their client base in the short run but negatively affect their ratings, downloads, financial performance, and innovation rate in the longer run.

Discipline

Strategic Management Policy | Technology and Innovation

Research Areas

Strategy and Organisation

Publication

Academy of Management Journal

Volume

2024

Issue

1

ISSN

0001-4273

Identifier

10.5465/AMPROC.2024.12928abstract

Publisher

Academy of Management

Additional URL

https://doi.org/10.5465/AMPROC.2024.12928abstract

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