Private Regulation by Platform Operators: Implications for Usage Intensity
|Type:||Articles in Refereed Journals (International)|
|Published by:||Discussion Papers in Business Administration|
|:||2010-06, University of Munich, Munich School of Management|
Platforms operators act as private regulators to increase usage and maximize profits. Their goals depend on the development of the platform: overcoming the chicken-egg problem early on requires attracting platform participants while quality becomes more important later on. Private regulators influence third-party business models, entry barriers, and usage intensity. We analyze how drivers of usage intensity on Facebook’s application platform were affected by a policy change that increased quality incentives for applications. This change led to the number of installations of each application becoming less important, applications in more concentrated sub-markets achieving higher usage, and applications staying attractive for longer.