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Modern technology markets are characterized by the presence of a network effect, a phenomenon that significantly affects network adoption. While providing the advantage of belonging to a network, network effects can curb the diffusion of alternative technological products, which can negatively influence public welfare. The purpose of this article is to work out a method of a compound impact analysis of direct network effect, critical mass and standardization when assessing changes in the competitive environment on a two-sided software market using the case of operating systems (OS). The theory of network effects constitutes the methodological framework of the study. The research method is an econometric analysis of the impact of the installed base of users, switch of standards and gain of a critical mass of users by applying a basic within model and a difference GMM model. The database consists of monthly country data on website visitors’ activity from the StatCounter web analytics service by desktop, mobile, and tablet devices for the period from 2009 to 2019. The study shows that, due to the saturation effect, markets experience a slowdown in the influence of network effects. The desktop OS market is characterized by the presence of a de facto standard, that is Windows OS, which indicates the monopolization of this segment. OSX, Android, and iOS are industrywide standards. The proposed approach allows analyzing a direct network effect jointly with gain of a critical mass of users and switch of standards.

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Consumer-to-consumer (C2C) platforms have become a major engine of growth in Internet commerce. This is especially true in countries such as China, which are experiencing a big rush toward e-commerce. The emergence of such platforms gives researchers the unique opportunity to investigate the evolution of such platforms by focusing on the growth of both buyers and sellers. In this research, we build a utility-based model to quantify both cross and direct network effects on Alibaba Group's Taobao.com, the world's largest online C2C platform (based in China). Specifically, we investigate the relative contributions of different factors that affect the growth of buyers and sellers on the platform. Our results suggest that the direct network effects do not play a big role in the platform's growth (we detect a small positive direct network effect on buyer growth and no direct network effect on seller growth). More importantly, we find a significant, large and positive cross-network effect on both sides of the platform. In other words, the installed base of either side of the platform has propelled the growth of the other side (and thus the overall growth). Interestingly, this cross-network effect is asymmetric with the installed base of sellers having a much larger effect on the growth of buyers than vice versa. The growth in the number of buyers is driven primarily by the seller's installed base and product variety with increasing importance of product variety. The growth in the number of sellers is driven by buyer's installed base, buyer quality, and product price with increasing importance of buyer quality. We also investigate the nature of these cross-network effects over time. We find that the cross-network effect of sellers on buyers increases and then decreases to reach a stable level. By contrast, the cross-network effect of buyers on sellers is relatively stable. We discuss the policy implications of these findings for C2C platforms in general and Taobao in particular. Data, as supplemental material, are available at . [ABSTRACT FROM AUTHOR]