Effects of Market Size and Competition in Two-Sided Markets: Evidence from Online Dating

This paper presents a field experiment designed to independently measure cross-side and same-side network effects. I conduct this experiment in collaboration with an online dating platform to examine how the number of platform users on the opposite side (“market size”) and number of platform users on the same side (“competition size”) impact search behavior. The experiment provides a user-level information treatment by indicating the lower bound on the number of men and women near the user’s location. I find that, on average, an increase in market size deters users from participating in the market. Conditional on participating, market and competition size influence matching decisions. Specifically, an increase in market size causes users to become more selective, whereas competition causes users to become less selective. I discuss potential underlying mechanisms that can explain these empirical findings.

History: Tat Chan served as the senior editor.

Funding: This work was supported by Data Provider (worked as a contractor during experiment implementation).

Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mksc.2023.0142.