Exploring Growth Dynamics of Platform Ecosystems

Understanding value creation and appropriation in platform ecosystems is highly relevant in an economy where competition increasingly shifts to an ecosystem level. We explore how the strength of network effects and participant inertia influence the growth dynamics of platform ecosystems. We use a system model of a platform ecosystem with interdependent buyer and seller populations to explore the how value creation and distribution shifts during platform ecosystem growth. We find that increasing the strength of network effects and lowering inertia are substituting growth strategies. Value distribution depends on a dynamic equilibrium between buyer and seller populations, which evolves during platform growth. We contribute to the literature on multi-sided platforms by highlighting the role of time for the strategic decisions of platform participants and policy makers.