Pricing In Two-sided Markets Considering Reference Price And Business Expansion

The practice of two-sided markets has become an important force in promoting economic growth,attracting the attention of many scholars,and has achieved rich achievements in pricing and competitive strategies of platforms.However,existing studies seldom consider the impact of reference prices on pricing strategies in two-sided markets,and seldom consider the cross-border development of platforms and the integration of competition among platforms.Hence,we first study the platform pricing considering reference price when users are homogeneous and heterogeneous in the monopoly market,and then we consider the platform pricing considering business expansion in the monopoly market.Finally,we make a systematic study of platform pricing under the occasion of competition and coopetition with business expansion.We first study the influence of reference price on monopoly platform pricing with different information levels under the situation of homogeneity of users.The results show that when a monopoly platform sets a reference price,price information should be disclosed to enable users to form responsive expectations.In addition,when users are uninformed,the platform's optimal pricing on both sides is directly proportional to the reference price.The difference is that when users are informed,as the cross group network externalities on both sides of the platform increase,the optimal price of the buyer(seller)of the platform first increase and then decrease with the increase of the buyer(seller)'s reference price.In addition,the relationship between the reference price on the seller(buyer)side and the platform's pricing for the buyer(seller)also depends on the relative size of the cross group network externalities.Secondly,in the case of heterogeneous users,we study the pricing strategy of monopolistic platform when the reference price is exogenous and endogenous.Research has concluded that when the reference price is exogenous,the platform is not always more aggressive on the side with the greater network externality,and charging or subsidizing for users on both sides depends on the strength of the cross group network externality and the influence coefficient of the reference price.When the reference price is endogenous,the platform is always more aggressive on the side with greater network externality.At this time,the reference price on the buyer side is always higher than the actual membership fee by a fixed value.The size of the fixed value depends on the buyer's gain-loss sensitivity to the reference price.Thirdly,we consider the pricing strategies of monopoly platforms considering network effects and business expansion,and focus on analyzing the influence of network effects on platform pricing strategies with business expansion.We find that when the cross-market network effect is small,the platform charges a certain membership fee to users on both sides of the original business.When the cross-market network effect is large,the platform subsidizes users on both sides of the original business.The platform does not charge for the new business and the original business with cross-market network effect,and always charges membership fees for users on the other side.The membership fee charged by the original business of the platform decreases with the increase of the cross-market network effect,and the membership fee charged for the new business increases with the increase of the cross-market network effect.Fourth,we study the pricing of competing platforms for business expansion under both fixed and unfixed market capacity.We find that regardless of whether the market capacity is fixed or not,when the market awareness is greater than a certain threshold,the business expansion platform will no longer increase its market awareness of new business,even if there is no cost.When the market awareness exceeds a certain threshold,the optimal pricing and equilibrium profits of the two platforms in their competing business will decrease as the market awareness of the business expansion platform increases.When the market awareness is less than a certain threshold,the optimal pricing of the two platforms' competing business is fixed.The optimal pricing of the original business of the platform depends on the size of the cross-market network externalities and cross side network externalities.Finally,we discuss the compatibility and pricing strategies of competing platforms considering business expansion and demand sharing.We find that the price competition between the two platforms may increase or decrease after compatibility,which is related to the demand for sharing and the reduced misfit cost after compatibility.As the commission rate increases,the platform that shares demand is more willing to be compatible and the platform that shares demand is less willing to be compatible.As the reduced misfit cost increases,the two platforms are even more reluctant to be compatible.When the sharing demand is small,as the sharing demand increases,the two platforms are more willing to be compatible.When the sharing demand is greater,as the sharing demand increases,the two platforms are less willing to be compatible.With the reduction of misfit costs and the increase in sharing demand,consumer surplus will be greater after compatibility.