Optimal Pricing Strategy For A Free-floating Vehicle Sharing Platform

To offer theoretical guidance of platforms pricing management for China's free-floating bike sharing platform companies,this article researches two major problems on pricing strategies of a monopoly platform company.One is that the platform should choose the fixed pricing strategy or the distance related pricing strategy.The other is whether the monthly strategy should be introduced after the fixed pricing strategy is chosen by the platform.To answer the first one question,we assume that consumers are heterogeneous and they make choices to maximize their utility.Then we construct a pricing model for free-floating vehicle sharing platforms to make the best pricing decision,explore the influences of cost and quantity of vehicles on platforms' pricing decision and revenue,as well as social welfare,and compare the platforms' profit,the number and the utilization rate of vehicles,consumer surplus and social welfare under two different pricing strategies.We find that 1)sharing vehicles will reduce vehicle purchase rate,improve vehicle utilization,and create higher consumer surplus and social welfare.2)Besides,compared with the distance related pricing strategy,the fixed pricing strategy will result in more declines in purchase rate and more increases in vehicle utilization rate and consumer surplus.3)Social welfare increases more under the fixed pricing strategy when the vehicle costs are low,and more under the distance related pricing strategy when the vehicle costs are high.4)If the vehicle costs are low and quantities are high,platforms will make more revenue under the fixed pricing strategy;otherwise,platforms will make more revenue under the distance related pricing strategy.In order to answer the second question,we also construct a pricing decision model under the monthly strategy,and compares the platform revenue before and after the launch of the monthly strategy.We find that,1)after the launch of the monthly strategy,the revenue of the platform will not be lower than the original revenue as long as the monthly price is reasonable;the introduction of a monthly strategy can increase the average income of the platform by3.86%,and the lower the vehicle cost,the higher the growth rate.2)It is win-win situation for both platforms and consumers to introduce the monthly pricing strategy.