Purpose Managing market competition is crucial for online tourism platforms. Existing research focuses on platform growth strategies to attract sellers, ignoring that the resulting market competition may erode the supply-side scale. Therefore, this study aims to examine the dynamic impact of market competition on the supply-side scale, in terms of seller numbers and product diversity, while exploring the moderating role of market reputation. Design/methodology/approach Using a panel dataset of products from 48 Chinese outbound tourism markets on Ctrip.com (a top online tourism platform), this study employs a panel vector autoregressive model to test the hypotheses. Findings Results reveal that the impact of market competition is characterized by temporal asynchrony and magnitude asymmetry. In the short term, market competition positively affects product diversity without affecting seller numbers. In the long term, it has a stronger negative impact on seller numbers, while its positive impact dissipates. Furthermore, market reputation acts as a stabilizing mechanism: it mitigates the negative impact of competition on seller numbers but also weakens the positive stimulus for product diversity. Originality/value First, we reconcile mixed findings by challenging the simultaneous-effects assumption in prior research. By introducing a temporal perspective, we reveal that the positive and negative effects of competition unfold sequentially rather than coexist as a trade-off, implying inconsistent findings reflect different stages of a dynamic process. Second, we extend reputation research from the product or seller level to the market level, highlighting market reputation as a stabilizing mechanism for supply and addressing limited understanding of reputation at the systemic level.