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Review of Network Economics

Editor-in-Chief: Grzybowski, Lukasz

Ed. by Briglauer, Wolfgang / Goetz, Georg / Pereira, Pedro

4 Issues per year

IMPACT FACTOR 2017: 0.357
5-year IMPACT FACTOR: 0.894

CiteScore 2017: 0.64

SCImago Journal Rank (SJR) 2017: 0.315
Source Normalized Impact per Paper (SNIP) 2017: 0.770

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Volume 9, Issue 4


Failure to Launch: Critical Mass in Platform Businesses

David S. Evans / Richard Schmalensee
Published Online: 2010-12-03 | DOI: https://doi.org/10.2202/1446-9022.1256

Platform businesses add value by facilitating interactions between customers who are attracted in part by network externalities. Two-sided platform businesses with low costs of reversing participation status have become more important with the rise of the Internet. This essay is concerned with new businesses of this sort and the initial critical mass hurdle that they generally seem to face. In a very general model, we show how this hurdle depends on the nature of network effects, the dynamics of customer behavior, and the distribution of customer tastes. Weak, plausible assumptions about adjustment processes imply that platforms must get a sufficient number of members of both sides on board to launch successfully.

Keywords: network; two-sided; startup; platform

About the article

Published Online: 2010-12-03

Citation Information: Review of Network Economics, Volume 9, Issue 4, ISSN (Online) 1446-9022, ISSN (Print) 2194-5993, DOI: https://doi.org/10.2202/1446-9022.1256.

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