Staying Offline or Going Online? Managing the Establishment of Service Platforms

ABSTRACT We study a global game in which consumers and sellers decide whether to join a service platform and interact more efficiently online. Uncertainties about the platform's technology value and users' participation behavior on both market sides cause a coordination problem. Facing this problem, the platform management can strategically influence the probability of a successful establishment through its information policy. When users' expectations about the platform's technology value are pessimistic, the platform can increase its success probability by addressing sellers through individual information channels. When expectations are optimistic, the platform can increase this probability by addressing users through public information channels.