Working Paper: NBER ID: w24938
Authors: Guangyu Cao; Ginger Zhe Jin; Xi Weng; Lian Zhou
Abstract: 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.
Keywords: bikesharing; network effects; competition; market expansion; market stealing
JEL Codes: D22; L1; L4; L9; R4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Mobike's entry (L92) | Ofo's trip volume (R41) |
| Mobike's entry (L92) | Ofo's average revenue per trip (R48) |
| Mobike's entry (L92) | Ofo's percentage of active old users (D16) |
| Mobike's entry (L92) | Ofo's bike utilization rate (L97) |
| Mobike's entry (L92) | Ofo's investment in bike fleet (R42) |
| Mobike's entry (L92) | Ofo's service quality and user experience (L15) |