NFT Disruption in Platform Competition: Evidence from Trading Card Collectibles

The emergence of blockchain technology has catalyzed the creation of innovative platforms, diverging significantly from traditional incumbents. To date, the literature has remained silent on exploring the implications of blockchain-based platforms for established platform competition. This study addresses this gap, examining the impact of the blockchain-based platform "NBA Top Shot", which offers digital collectibles, on the pricing of physical collectibles within an incumbent platform. We use data from eBay as the incumbent and we find that the challenger's entry led to a decline of 5.2% (US$ 27.7) in the prices of the incumbent. Studying each actor's (buyers and sellers) reactions, we find that buyers' willingness to pay drops by 10.3% whereas sellers' reservation prices decrease by 5%, suggesting the new entrant cannibalizes demand from the incumbent. We further explore platform differences and analyze how the challenger's decisions regarding product selection and scarcity, along with the incumbent's heterogeneity (seller reputation and product quality), influence these pricing dynamics. Last, we conduct a series of tests using multiple data sets to validate our identification strategy, estimate the economic implications of the impact, and discuss the contributions of our work.