Agent Heterogeneity in Two-Sided Platforms: Superstar Impact on Crowdfuding

Abstract

The arrival of high-performing sellers may impact the trajectory of early- stage two-sided platforms. This paper investigates how these “outliers” affect the platform’s subsequent growth and liquidity. In the crowdfunding context, outliers are followed by a relative increase in entry and transaction volume on the competing platform. Moreover, this average effect is stronger for marginal—that is, low-quality—sellers. On the platform hosting the outlier, transaction volume increases for sellers in the outlier’s category, but this average effect reverses for outliers in certain product categories. The results suggest that the impact of outliers depends on platform rules and that competing platforms may selectively focus on attracting potential high-performers to achieve the desired mix of buyers and sellers.