Abandoning the Chicken-and-Egg Problem: Entry Scenarios in Two-Sided Markets

Extent research on entry strategies in two-sided markets often assumes that participants' adoption decisions are made exclusively based on network effects. As such, a tenant of management research regards the formulation of managerial strategies for overcoming an initial 'chicken-and-egg' problem. Simultaneously, empirical studies have argued that platforms may indeed emerge despite a lack of network effects, seemingly in violation of extant theoretical predictions. We provide a model of platform adoption in which the presence of so- called 'innovators' explains such entry. Reviewing the model, we determine that three entry scenarios are viable in two-sided markets with heterogeneous adopter motivations, neither of which leads to a chicken-and-egg problem. Our conclusion is that the phenomenon may be reinterpreted as cases where a platform is absent 1) A sufficient value proposition and/or 2) A market with innovative adopters. We argue that the latter case is mainly theoretical and so of limited value to managers.