Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • July 2023
  • Article
  • Management Science

Marketplace Scalability and Strategic Use of Platform Investment

By: Jin Li, Gary Pisano, Richard Xu and Feng Zhu
  • Format:Print
  • | Pages:18
ShareBar

Abstract

The scalability of a marketplace depends on the operations of the marketplace platform as well as its sellers’ capacities. In this study, we explore one strategy that a marketplace platform can use to enhance its scalability: providing an ancillary service to sellers. In our model, a platform can choose whether and when to provide this service to sellers and, if so, what prices to charge and which types of sellers to serve. While such a service helps small sellers, we highlight that the provision of such a service can diminish the incentives of large sellers to make their own investment, thereby reducing their potential output. When the output reduction by large sellers is substantial, the platform may not want to provide the ancillary service and, even if it does, it may choose to set a price higher than its marginal cost to motivate large sellers to scale. The platform may also choose to strategically delay the provision of the service.

Keywords

Two-sided Platforms; Services; Digital Platforms

Citation

Li, Jin, Gary Pisano, Richard Xu, and Feng Zhu. "Marketplace Scalability and Strategic Use of Platform Investment." Management Science 69, no. 7 (July 2023): 3958–3975.
  • Find it at Harvard
  • Read Now
  • Purchase

About The Authors

Gary P. Pisano

→More Publications

Feng Zhu

Technology and Operations Management
→More Publications

More from the Authors

    • January 2025
    • Faculty Research

    Driving Efficiency and Sustainability at P&G China

    By: Feng Zhu, Philip Kuai and Billy Chan
    • November–December 2024
    • Harvard Business Review

    How to Avoid the Agility Trap

    By: Jianwen Liao and Feng Zhu
    • November 2024 (Revised April 2025)
    • Faculty Research

    Cheerful Music

    By: Shunyuan Zhang, Feng Zhu and Nancy Hua Dai
More from the Authors
  • Driving Efficiency and Sustainability at P&G China By: Feng Zhu, Philip Kuai and Billy Chan
  • How to Avoid the Agility Trap By: Jianwen Liao and Feng Zhu
  • Cheerful Music By: Shunyuan Zhang, Feng Zhu and Nancy Hua Dai
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.