Pricing strategy to increase two-sided platform profit by exploiting critical mass
DOI:
Author:
Affiliation:

Clc Number:

F062.5

Fund Project:

  • Article
  • |
  • Figures
  • |
  • Metrics
  • |
  • Reference
  • |
  • Related
  • |
  • Cited by
  • |
  • Materials
  • |
  • Comments
    Abstract:

    Considering that critical mass is determined endogenously by price and other factors,and different from existingliterature which take “critical mass”as the main factor impeding platform development,a two stage pricing strategy is proposed,by introducing complex network method,to improve the profit of two-sided platforms by means of exploiting the characteristics of critical mass. The thetwo-stage optimal pricing strategy examines,with numerical examples,how platform service quality,cross network effects and degree distribution exponent affect the optimal pricing strategy. Results show that the two-stage pricing strategy based on critical mass can improve platform's optimal profit significantly. Both the optimal profit and market share of the two-stage pricing will increase when improving the superiority of platform service quality. Stronger cross network effects or higher degree distribution exponent will improve the relative profit advantage of two-stage pricing than traditional pricing strategy. These results provide some guidelines and implications for platform managers to develop pricing strategies so as to make profits by exploiting the characteristics of critical mass.

    Reference
    Related
    Cited by
Get Citation
Share
Article Metrics
  • Abstract:
  • PDF:
  • HTML:
  • Cited by:
History
  • Received:
  • Revised:
  • Adopted:
  • Online: October 25,2021
  • Published:
You are the th visitor Address:Room 908, Building A, 25th Teaching Building, Tianjin University, 92 Weijin Road, Nankai District, Tianjin Postcode:300072
Telephone:022-27403197 Email:jmsc@tju.edu.cn