Abstract

This paper examines the evolution of competition and network advantages in platform markets under recession. Presenting a demand-based perspective, it explores how an external event in the form of a recession changes the value placed by customers on products and services, allowing new entrants with a superior price-performance proposition to improve their market performance and even leapfrog pioneers, breaking through entry barriers based on network effects distinctive of platform industries. In doing so it offers a new lens for assessing firms’ prospects of achieving superior performance when entering new markets. These arguments complement traditional supply-side perspectives on platform competition that emphasize challenges associated with technology performance and innovation efforts on stable –non macroeconomic turbulent- environments. Our study informs platform literature and management practice in recessions and it is supported by an empirical study on the smartphone operating system industry