Analysis of Network Effect in the Competition of Self-Publishing Market

• Li Chen ^[1] ; Wen Tang ^[2]
  1. [1] Fayetteville State University

     Fayetteville State University

     Township of Cross Creek, Estados Unidos

     
  2. [2] North Carolina State University

     North Carolina State University

     Township of Raleigh, Estados Unidos

     
• Localización: Journal of Theoretical and Applied Electronic Commerce Research, ISSN-e 0718-1876, Vol. 15, Nº. 3, 2020, págs. 50-68
• Idioma: inglés
• Enlaces
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• Resumen

  • Self-publishing has become a popular e-commerce model. In the current study, we build a duopoly model to examine the impact of the network effect on competition in this emerging market. We investigate four cases depending on two factors: market size and the self-publishing platforms’ compatibility strategy. Our results show that self-publishing writers receive higher royalties compared with the scenario of no network effect except in the case of both platforms choosing incompatibility strategy in the standard market. We also find that self-publishing platforms do not always benefit from the network effect. In the standard market, the platforms will be better off only when they choose incompatibility strategy and the network effect intensity is greater than a certain threshold. In the expanded market, our computational analysis shows that the revenue of the less-known self-publishing platform increases, but the revenue of the leading platform decreases when both platforms choose compatibility strategy. Our findings also show that both self-publishing platforms prefer incompatibility strategy under a strong network effect in the standard market. Otherwise, they prefer compatibility strategy under a weak network effect. In the expanded market, self-publishing platforms have an incentive to choose incompatibility strategy.