Moving Targets: Price, Quality, and Platform Competition
Published 4/1/2009
Author: JENNIFER BROWN and JOHN MORGAN
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Executive Summary
The study by Tellis, Yin, and Niraj in this issue suggests that when platforms compete, the higher-quality platform prevails. The authors of this comment highlight that the quality of a platform is a “moving target”; it varies with price, installed base, and dynamic improvements to performance of the platform itself. Experimental evidence suggests that surplus (price and quality) determines whether people will coordinate on high- or low-quality platforms. Although field and laboratory data shows that high-quality products often achieve market dominance, the authors argue that market share growth may lead to quality improvements in the long run.
Biography
Jennifer Brown is an assistant professor in the Department of Management and Strategy at the Kellogg School of Management at Northwestern University. She has used field experiments to examine platform competition and online auctions. Her recent empirical work has focused on studying competitors’ incentives and strategies in tournaments and contests. Her research on the adverse incentive effect of “superstar” competitors in tournaments has received widespread attention from mainstream media, including ESPN, National Public Radio, and Golf Digest. Her other projects have examined online reputation mechanisms and the effect of environmental regulations on wholesale gasoline markets. She received her PhD from the University of California, Berkeley (for more information, see http://www.kellogg.northwestern.edu/Faculty/Directory/Brown_Jennifer.aspx).
John Morgan is Gary and Sherron Kalbach Professor of Business Administration in the Haas School of Business, the University of California, Berkeley. His research interests include auctions, platform competition, mechanism design, and strategy. In 2009, he will be visiting Yahoo Research as a research associate. He founded Berkeley’s Xlab, a 40-subject laboratory for experiments in the social sciences. He created the MBA elective Game Theory, the most popular elective in the Berkeley MBA curriculum. Before coming to Berkeley, he was a professor in the Woodrow Wilson School for Public Policy at Princeton, where he also founded an experimental lab. His research has been featured in top academic journals and in mainstream media outlets, including the Wall Street Journal (for more information, see http://faculty.haas.berkeley.edu/rjmorgan/).
J Marketing Research, Volume 46, Number 2, April 2009
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