Winner-does-not-take-all: Selective attention and local bias in platform-based markets

Pontus Huotari, Kati Järvi, Samuli Kortelainen, Jukka Huhtamäki

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review

Abstract

We examine competition between platforms in platform-based markets with agent-based modeling. In our proposed model, a consumer adopts a platform that offers the most relative utility of competing platforms. More specifically, the utility is derived from the local direct network effects arising from the social network of the consumer and the indirect network effects arising from complementary products of the platform. We portray the consumer as selectively attentive and locally biased. We contrast the proposed model to several alternative models with empirical data from the competition between Sony’s PlayStation 3 and Microsoft’s Xbox 360 and show that the proposed model, where the aforementioned consumer characteristics, and platform pricing, explain the adoption decisions of consumers and thus the division of the market between platforms. We offer important insights on how the dynamics of competition on the macro-level emerge from micro-level interactions between consumers.
Original languageEnglish
Title of host publicationAcademy of Management Proceedings
PublisherAOM - Academy of Management
Publication date2015
Publication statusPublished - 2015
MoE publication typeA4 Article in conference proceedings
Event2015 Annual meeting of the Academy of Management (AOM) - Vancouver, Canada, Vancouver, Canada
Duration: 07.08.201511.08.2015
Conference number: 75

Publication series

NameAcademy of Management Proceedings
ISSN (Print)0065-0668
ISSN (Electronic)1543-8643

Keywords

  • 512 Business and Management
  • Adoption behavior
  • Agent-based modeling
  • Complementarities
  • Consumer behavior
  • Local bias
  • Network effects
  • Platform-based markets
  • Platform competition
  • Selective attention

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    Huotari, P., Järvi, K., Kortelainen, S., & Huhtamäki, J. (2015). Winner-does-not-take-all: Selective attention and local bias in platform-based markets. In Academy of Management Proceedings (Academy of Management Proceedings). AOM - Academy of Management.