Dynamic Competition Strategy for Online Knowledge-Sharing Platforms

Kihoon Kim and Edison Tse
International Journal of Electronic Commerce,
Volume 16 Number 1, Fall 2011, pp. 41-76.

Abstract: In the past decade, several knowledge-sharing Web sites, such as Yahoo! Answers, Microsoft Live QnA, and Naver Knowledge In, have emerged. These Web sites offer members platforms to share their knowledge by asking and answering questions. As a result of knowledge sharing between members, knowledge-sharing Web sites have an accumulated knowledge database of answered questions that attracts people who have questions. This research asks how long the knowledge-sharing Web site with the largest knowledge database and membership can sustain a leading market position. To answer this question from a two-sided market perspective, this study investigates the competitive effect of accumulated knowledge, the complexity of questions, and the price structure of advertising dynamics on the long-term viability of a latecomer to an online knowledge-sharing market; we numerically solve an open-loop differential game in which two knowledge-sharing platforms compete. We show that the longer the life span of accumulated knowledge, the higher the chance of survival of the latecomer. In addition, we show how the general complexity of questions asked affects optimal membership fees.

Key Words and Phrases: Differential game, e-commerce, economics of IS, knowledge-sharing service, two-sided markets.