Competitive Positioning of Complementors on Digital Platforms: Evidence from the Sharing Economy

Various platforms have recently emerged within the sharing economy and the phenomenon has started to affect several industries. While platforms such as Airbnb and BlaBlaCar are providing convenience and economic benefits to end-users, their success also turned them into crowded and competitive markets. With increasing numbers of products and services offered via the platforms, signals such as popularity and reputation have become critical market mechanisms that affect the decision-making processes of end-users. In this paper, we examine the positioning strategies of new hosts on Airbnb, a platform focused on accommodation sharing, to understand how they attempt to cope with the inherent lack of credible quality signals as they join the platform. By analyzing close to 47,000 listings, we find that new hosts follow a cost-leadership strategy rather than trying to differentiate their offerings. We also analyze how this strategy changes depending on prior platform-specific experience of hosts.