Effects of Market Size and Competition in Two-Sided Markets: Evidence from Online Dating

43 Pages Posted: 29 Jun 2023 Last revised: 24 Feb 2024

See all articles by Jessica Fong

Jessica Fong

University of Michigan Ross School of Business

Date Written: February 23, 2024

Abstract

This paper presents a field experiment designed to independently measure cross-side and same-side network effects. I conduct this experiment in collaboration with an online dating platform to examine how the number of platform users on the opposite side ("market size") and number of platform users on the same side ("competition size") impact search behavior. The experiment provides a user-level information treatment by indicating the lower bound on the number of men and women near the user's location. I find that on average, an increase in market size deters users from participating in the market. Conditional on participating, market and competition size influence matching decisions. Specifically, an increase in market size causes users to become more selective, whereas competition causes users to become less selective. I discuss potential underlying mechanisms that can explain these empirical findings.

Keywords: digital markets, two-sided matching, platform design, online dating

Suggested Citation

Fong, Jessica, Effects of Market Size and Competition in Two-Sided Markets: Evidence from Online Dating (February 23, 2024). Available at SSRN: https://ssrn.com/abstract=3458373 or http://dx.doi.org/10.2139/ssrn.3458373

Jessica Fong (Contact Author)

University of Michigan Ross School of Business ( email )

701 Tappan Ave
Ann Arbor, MI 48109
United States

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