Market Expanding or Market Stealing? Competition with Network Effects in Bikesharing
62 Pages Posted: 28 Aug 2018 Last revised: 28 Jan 2022
Date Written: August 2018
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.
Suggested Citation: Suggested Citation