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Abstract

This paper examines the effect of substitutive first-party content (SFPC) as a strategic variable by a business-to-business (B2B) e-commerce platform. Constructing a unique time-series dataset, we find that SFPC’s impact differs in the early stage of the platform and in the later stage when it has a larger user base and has transformed itself into a service provider. In the early stage, increasing SFPC can attract more buyers to trade but may crowd out sellers, leading to an insignificant impact on total trading volume. In the second stage, however, SFPC no longer hurts seller participation and increases total trading volume. We also find that SFPC could attract new users consistently across the two stages. Our findings suggest a strategic role of SFPC to mitigate the “chicken‐and‐egg problem ” in the early stage of a two-sided B2B platform and to continuously grow platform size when it becomes more established.

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Aug 10th, 12:00 AM

Substitutive First-party Content as a Strategic Decision for Platform Growth – Evidence from a B2B Platform

This paper examines the effect of substitutive first-party content (SFPC) as a strategic variable by a business-to-business (B2B) e-commerce platform. Constructing a unique time-series dataset, we find that SFPC’s impact differs in the early stage of the platform and in the later stage when it has a larger user base and has transformed itself into a service provider. In the early stage, increasing SFPC can attract more buyers to trade but may crowd out sellers, leading to an insignificant impact on total trading volume. In the second stage, however, SFPC no longer hurts seller participation and increases total trading volume. We also find that SFPC could attract new users consistently across the two stages. Our findings suggest a strategic role of SFPC to mitigate the “chicken‐and‐egg problem ” in the early stage of a two-sided B2B platform and to continuously grow platform size when it becomes more established.

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