Red Queen Competition Through Innovations On A Digital Platform For Experience Goods

This study examines a dynamic process of competition, learning, and innovation, referred to as "Red Queen," on a digital platform for trading experience goods. Specifically, by analyzing the package tours sold by 114 travel agencies on the world's largest online travel platform - Trip.com, the study reveals initial evidence of Red Queen as a type of intra-platform competition and how it is played out by firms through continuous innovations. The findings suggest that the providers of experience goods, on a digital platform without intellectual property protection, should maintain appropriate innovation postures according to the type of innovations and level of rivalry in the markets. High performance may result from leading postures for incremental innovations, and from middle-of-the-road postures for radical innovations, especially in high-rivalry markets. These findings can help experience goods providers strategize what, how, and where to innovate in order to beat competition and improve performance on digital platforms.