Platform Competition and User Generated Content: Evidence from Game Wikis

Abstract

Today, many platforms rely on contributions by users to create value. While they play an increasing role in today's digital economy, little is known about how dominant user-driven platforms emerge and what determines the quality and amount of the available content. We aim to extend our understanding of this phenomenon by studying the relationship between the level of competition and user activity. We argue that a platform's competitive position influences user behavior through two mechanisms: First, a more dominant position entails more favorable beliefs, leading to increased activity at the extensive margin, i.e. a higher number of users. Second, the level of competition affects the non-pecuniary benefits users can derive, impacting their activity at the intensive margin, i.e. how much and how frequently each contributes. We study these dynamics in the context of two competing game wiki platforms and exploit content updates as a source of exogenous variation in a quasi-experimental research design. We find that a more dominant position is associated with a higher level of user activity in aggregate, which is primarily driven by the extensive margin of content creation. In addition, this entails higher social benefits, leading to increased activity at the intensive margin. Lastly, we find evidence that a higher competition intensity can act as a motivating factor in itself.