Market Expanding or Market Stealing? Competition with Network Effects in Bikesharing

62 Pages Posted: 28 Aug 2018 Last revised: 28 Jan 2022

See all articles by Guangyu Cao

Guangyu Cao

Center on Contemporary China, Princeton University

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Li-An Zhou

Peking University - Guanghua School of Management

Date Written: August 2018

Abstract

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

Cao, Guangyu and Jin, Ginger Zhe and Zhou, Li-An, Market Expanding or Market Stealing? Competition with Network Effects in Bikesharing (August 2018). NBER Working Paper No. w24938, Available at SSRN: https://ssrn.com/abstract=3239274

Guangyu Cao (Contact Author)

Center on Contemporary China, Princeton University

United States

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Li-An Zhou

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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