Openness as Platform Strategy - Evidence from a Quasi-Experiment in Crowdfunding
36 Pages Posted: 7 Mar 2018
Date Written: March 1, 2018
A platform's decision to open up its marketplace is at the core of its business strategy. It needs to balance between the benefits of market thickness and the costs of potential congestion and quality concerns. We discuss how openness can increase platform value and test our hypotheses by analyzing the strategic decision of a leading crowdfunding platform to switch from access control to de facto openness. The decision increased market thickness on the previously access-controlled supply side of crowdfunding projects. The platform hereby gained market share from its main competitor. Market matches on the platform increased in absolute but not in relative terms. Moreover, quality on the supply side declined immediately, lowering platform value for demand-side users.
Keywords: Platforms, openness, platform governance, crowdfunding
JEL Classification: G24, L13, L15
Suggested Citation: Suggested Citation