When digital platforms undergo crises due to scandals or product/service failures, the parties at stake include the two sides of “customers” that transact through the platform: the supply and the demand side.
We investigate whether and how the two sides respond to a platform crisis and whether the impact spills over to a rival platform. Our empirical context focuses on the scandal surrounding Kickstarter in 2019 when it was accused of union busting. To establish the causality, we use a difference-in-differences approach using two separate control groups and show consistently that there was a decrease in the supply of projects on Kickstarter post-crisis.
The drop in the probability of a project being active ranges from 5.53% to 21.02%, translating to the platform’s revenue loss between $0.31 to $1.17 million. The demand-side reaction is not as severe, showing as much or more backers’ support and pledged amounts to the active projects post-crisis. Indiegogo, Kickstarter’s main rival, experienced a negative spillover on the supply side. Our analysis of creator heterogeneity informs that cultural project creators were more likely to decrease participating on Kickstarter after the crisis but less so on Indiegogo.
We highlight implications for managers of platforms, supply-side agents, and policymakers.
Sungtak Hong joined Bocconi University in 2016 and his research lies in the field of quantitative marketing with a strong focus on empirical analysis of the inter-related decisions made by manufacturers, retailers and consumers.
He earned a PhD in marketing from London Business School, an MSc in economics from the London School of Economics, and a BA in economics from Sogang University. Prior to the doctoral studies, he gained industry experience in the marketing field at Unilever and Nielsen (KR) and he worked as a research fellow at International Growth Centre (UK).
His research efforts aim to apply theories and methods from economics and econometrics to interesting marketing problems. Empirical contexts of his studies include students' choice over higher education, competition in fast-food industry, and the impact of policy shocks on the alcoholic beverage markets and on the two-sided markets such as crowdfunding platforms.
The seminar will be held in English.
Major Information: Daniela Bolzani (daniela.bolzani@unibo.it).