Winner does not take all: Selective attention and local bias in platform-based markets
Authored by Pontus Huotari, Kati Jarvi, Samuli Kortelainen, Jukka Huhtamaki
Date Published: 2017
DOI: 10.1016/j.techfore.2016.08.028
Sponsors:
Tekes the National Technology Agency of Finland
Platforms:
No platforms listed
Model Documentation:
Other Narrative
Mathematical description
Model Code URLs:
Model code not found
Abstract
We model how macro-level dynamics of platform competition emerge from
micro-level interactions among consumers. We problematize the prevailing
winner-take-all hypothesis and argue that instead of assuming that
consumers value the general connectivity of an entire network, they are
selectively attentive and locally biased. We contrast several
alternative agent-based models with differing sets of assumptions
regarding consumer agents' behavior and compare their predictions with
empirical data from the competition between Sony's PlayStation 3 and
Microsoft's Xbox 360. The results show that only when consumers are
assumed to be selectively attentive and locally biased is it possible to
explain real-life market sharing between the given platforms. In effect;
it is shown how a late-entrant platform can get adopted by most
consumers in the market, despite the fact that an early entrant has
greater initial installed base, greater pool of complementary products,
and lower initial price. (C) 2016 Elsevier Inc. All rights reserved.
Tags
Competition
Simulation
Agent-based modeling
Evolution
Innovation
diffusion
Model
Network externalities
Us
Adoption behavior
Complementarities
Network
effects
Platform competition
Video game industry
2-sided markets