Essays on Two sided Platforms: Market Entry Strategy and Dynamic Pricing
This dissertation consists of two chapters: In the first chapter, we build a theoretical framework to study the dynamic entry interactions between two platforms with homogeneous products into city based markets. This research is applicable for studying the entry strategies between, for example, Uber and Lyft; Groupon and Living Social, and other business models with the attributes of switching cost, network effect, and segregated markets. We address three questions in this paper: 1) What determines the expansion path of city based platforms? 2) What factors are affecting the market concentration structures; and 3) Under what conditions can a second mover become the market leader (with more than 50% of the market share) We find that a significant degree of the network effect and large switching cost will build a natural barrier for the late entrant; Transaction efficient markets with larger transaction volume are less likely to be concentrated than transaction inefficient markets. We take consideration of entry cost and initial fund in our dynamic settings, and find that the uncertainty in market return will make the platforms' expansion path and the final outcome less predictable. However, on average, the capability of capturing the largest market first is crucial for both players; if a platform loses the opportunity of being the first to capture the largest market, it may have to raise a considerable amount of money to overcome its disadvantages in the