The Role of Quantitative and Qualitative Network Effects in B2B Platform Competition
33 Pages Posted: 10 Dec 2012 Last revised: 22 Aug 2014
Date Written: November 10, 2012
This article aims at investigating how quantitative and qualitative (indirect) network effects impact pricing and trading decisions on a Business-to-Business marketplace. Using an original data set collected on MFG.com, one of the most prominent B2B platforms in the U.S.A., we ﬁnd that the market share of a marketplace depends on both the quantity and quality of suppliers, but that quality effects tend to substitute for quantity effects as the size of the marketplace increases. These results suggest that while the quantity of suppliers on board is crucial during the early stage of a marketplace, supplier quality matters much more in the mature stage.
Keywords: network effects, business-to-business, electronic marketplace, two-sided market
JEL Classification: L14, L15, L81
Suggested Citation: Suggested Citation