Abstract

Two-sided digital platforms mediate between two independent groups of users in a virtual marketplace. Firms such as Airbnb have impressively demonstrated the disruptive effects of business models relying on such platforms. In setting up a new platform from scratch, however, platform operators are con-fronted with a challenge that is often referred to as the chicken-and-egg problem, that is, the platform needs to attract groups of users on both sides, but users on either side will only join the platform if they expect sufficient users on the other side. Analysing the formation processes of the respective user bases is difficult due to the complexity of these processes, which are driven not only by measures set by the platform provider but also by word of mouth between (potential) users and normative social influence among them. In this paper, we introduce an agent-based model that can be used to simulate early-stage development of two-sided digital platforms and illustrate the model’s applicability by means of a real case.

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