'Crowds' of Amateurs & Professional Entrepreneurs in Marketplaces

51 Pages Posted: 19 Jun 2017 Last revised: 15 Feb 2019

See all articles by Kevin Boudreau

Kevin Boudreau

Northeastern University; National Bureau of Economic Research (NBER)

Date Written: January 5, 2019

Abstract

Digital platform-based marketplaces often have a wide variety of amateurs working alongside professional enterprises and entrepreneurs. Can a platform owner alter the number and mix of market participants? I develop a theoretical framework to show that amateurs emerge as a distinct type of market participant, subject to different market selection conditions, and differing from professionals in quality, willingness to persist on the platform, and in mix of motivations. I clarify how targeted combinations of tweaks to platform design can lead the “bottom to fall out” of a market to large numbers of amateurs. In data on mobile app developers, I find that shifts in minimum development costs and non-pecuniary motivations are associated with discontinuous changes in numbers and types of developers, precisely as predicted by theory. The resulting flood of low-quality amateurs is in this context is associated with equally significant increases in numbers of high-quality products.

Keywords: platforms, complementors, crowds, entrepreneurs, long tail

JEL Classification: D4, E26, J4, L1, L8, 03

Suggested Citation

Boudreau, Kevin, 'Crowds' of Amateurs & Professional Entrepreneurs in Marketplaces (January 5, 2019). Available at SSRN: https://ssrn.com/abstract=2988308 or http://dx.doi.org/10.2139/ssrn.2988308

Kevin Boudreau (Contact Author)

Northeastern University ( email )

805 Columbus Ave, Interdisciplinary Sci & Eng Bldg
Huntington Ave
Boston, MA 02115
United States

HOME PAGE: http://www.kevinboudreau.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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