Daily deal sites, such as Groupon and LivingSocial, have experienced phenomenal growth in the past few years.  Daily deal sites are typical examples of two-sided markets with consumers on one side and the participating merchants on the other side and the value of the platforms to each side is interdependent. Consumers value a daily deal site more if there are more merchants offering deals on the site. Meanwhile, merchants are more likely to place a deal on a website with a big customer subscription base. Consumer behavior together with merchant behavior creates a network effect. However, merchants also face the tradeoff that a more popular site while attracting more consumers also attracts more merchants in the same category competing for consumer attention and purchase. In this paper we use a simultaneous equation model to empirically estimate the multiple effects, including the direct and indirect network effect and the competition effect across and within platforms of the daily deal industry, using data that tracks the deal offerings and sales of the major daily deal sites in US market. We also perform counterfactual analysis to examine how different factors would affect a deal platforms’ long run market share.