Guanghua School of Management
for Sharing Economy Research
Institutional Affiliation: Peking University
NBER Working Papers and Publications
|August 2018||Market Expanding or Market Stealing? Competition with Network Effects in BikeSharing|
with , , : w24938
Using staggered entry of two dockless bikesharing firms, we find the entrant expands the market for the incumbent. The entry helps the incumbent to serve a greater number of trips, make more bike investment, achieve higher revenue per trip, improve bike utilization rate, and form a wider and more evenly distributed network. The market expansion effect on new users dominates a significant marketstealing effect on old users. These findings, together with a theoretical model that highlights consumer search and network effects, suggest that a market with positive network effects is not necessarily winnertakesall, especially when users multihome across compatible networks.