Market Expanding or Market Stealing? Competition with Network Effects in BikeSharing Guangyu Cao Ginger Zhe Jin Xi Weng Li-An Zhou NBER Working Paper No. 24938

Issued in August 2018, Revised in August 2019

NBER Program(s):Industrial Organization

Using staggered entry of two dockless bikesharing firms, we find the entrant expands the market for the incumbent. The entry helps the incumbent to serve a greater number of trips, make more bike investment, achieve higher revenue per trip, improve bike utilization rate, and form a wider and more evenly distributed network. The market expansion effect on new users dominates a significant marketstealing effect on old users. These findings, together with a theoretical model that highlights consumer search and network effects, suggest that a market with positive network effects is not necessarily winnertakesall, especially when users multihome across compatible networks.

(578 K) Acknowledgments Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): 10.3386/w24938