Heterogeneous cross-side network effects on peer-to-peer platforms: Implications of nonprofessional suppliers and professional suppliers

Abstract

Cross-side network effects (CNEs) have been widely acknowledged in platform literature for their central role in shaping platform growth and governance. While growing literature focuses on the relative strengths of CNEs driven by suppliers and consumers, most studies assume that suppliers are homogeneous and thereby overlook the potential heterogeneity of CNEs driven by different suppliers. This study contributes by further distinguishing between nonprofessional and professional suppliers on P2P platforms. Using panel-vector-auto-regression (PVAR) analysis, we examine whether the strengths of CNEs between suppliers and consumers are heterogeneous across these two types of suppliers. The empirical results suggest that regarding supplier-to-consumer CNEs, both the quantity and quality of nonprofessional suppliers (vs. professional suppliers) have stronger CNEs on consumer size. In turn, regarding consumer-to-supplier CNEs, consumer size has stronger CNEs on the quantity of nonprofessional suppliers (vs. professional suppliers) but has weaker CNEs on the quality of nonprofessional suppliers (vs. professional suppliers). These findings contribute to the theoretical understanding of the dynamic nature of CNEs and practical strategies for platform governance in coordinating with nonprofessional and professional suppliers.