Pricing and Service Strategies for Two-sided Platforms

Nowadays,more and more transactions or interactions like online dating and shopping are completed on two-sided platforms involving two groups of agents.On these two-sided platforms,there often exist cross-network effects,i.e., the benefits that agents at one side receive are positively related to the number of agents at the other side,and vice versa.This paper considers such two-sided platforms,where the platforms offer a certain service to attract agents of both sides to join the platforms,and then charge agents who join the platforms a lump-sum fee to gain the profit.We present service and pricing strategies for both monopolistic and duopolistic platforms,respectively.We also investigate the impact of platforms'life cycle on their service and pricing strategies.Some managerial implications are shown.

Platform Competition for Advertisers and Viewers in Media Markets with Endogenous Content and Advertising

In this paper,we investigate two competing pay-tv platforms or free-to-air media platforms that consist of two groups of agents:viewers and advertisers.The pay-tv platforms can receive revenues from charging viewers pay-per-view prices and advertising,while the free-to-air platforms can only obtain all incomes from advertising.We discuss and compare advertising intensities and program content provisions of the two competing media platforms.Our findings show that if the extent to which viewers dislike advertising(the nuisance for advertising)is more massive than the marginal benefit that advertisers receive from an additional viewer,the pay-tv stations tend to maximally differentiate their program content and charge the viewers higher pay-per-view prices.If the nuisance approaches to the marginal benefit,however,both stations should offer similar program content,and charge the viewers lower prices under certain conditions.Particularly,if both platforms provide duplicated content,they should subsidize the viewers.In contrast,we show that the free-to-air media platforms never duplicate program content with a positive nuisance for advertising,and tend to offer maximal differentiated content if the nuisance is sufficiently large.Moreover,we reveal that if the viewers greatly dislike advertising(care less about advertising),the advertising volume of the pay-tv platforms is lower(higher)than that of the free-to-air platforms.Finally,we extend our base model to the case in which a pay-tv platform competes against a free-to-air station,and numerically show that the profit of the pay-tv platform may be larger or smaller than that of the free-to-air station.

Optimal Pricing Strategies for a Manufacturer and a Value-Adding Retailer in a Dual-Channel Environment

In this paper,we study a supply chain that consists of a manufacturer and a value-adding retailer that sell a product to customers through dual channels,i.e.a traditional channel(TC)and an online channel(OC).Observing that in practice,the manufacturer may or may not offer an OC guide price to the retailer and/or act as the leader in the supply chain,we discuss and compare two practical pricing strategies,with and without an OC guide price,under two different power configurations based on which member of the supply chain acts as the leader.Our results show that if the manufacturer does not provide a guide price,the retailer might/might not set a higher TC price than the two OC prices,depending on the level of migration effectiveness and the potential market demand.However,if the manufacturer does provide a guide price,the retailer will always charge a higher TC price than the guide price(or the two OC prices)when the retailer acts as the leader.Moreover,we show that the two players in the supply chain might or might not prefer the pricing strategies with an OC guide price.Our results also indicate that migration effectiveness harms the retailer's profit,and the manufacturer may benefit from mild competition between the two channels.Finally,we show that regardless of whether the manufacturer chooses to offer an OC guide price or not,both the manufacturer and the retailer prefer to act as the follower for high migration effectiveness and the profit of the supply chain will increase when the retailer acts as the leader for low migration effectiveness.

INVENTORY REPLENISHMENT POLICY FOR THE DECISION MAKER WITH PRESENT-BIASED PREFERENCE AND TIME-INCONSISTENCY UNDER INFLATION

Due to bounded rationality, people often rush for instantaneous gratification if the decisions involve immediate rewards, but procrastinate if the decisions involve immediate costs. Present-biased preference and time-inconsistency will be more salient when people are making inter-temporal decisions to trade off rewards and costs in the future. People outweigh the present and their preference for the outcome in the furore will decline over time. Incorporating present-biased preference and time-inconsistency under quasi-hyperbolic discounting, time value of money under inflation and time-varying demand with shortages completely backlogged, we develop an inventory replenishment model for a deteriorating item. Inventory replenishment policies that benefit the decision maker are as follows. With the increase of time-inconsistency, one can increase ordering number and decrease fraction of shortages; with the increase of hazard rate within an upper limit, one can increase ordering number and decrease fraction of shortage; with the increase of compounded discount rate, one can increase ordering number and fraction of shortage. Hyperbolic discounting increases the ordering number and decreases the final profit, and the degree of hyperbolic discounting strengthens such outcomes. As a result, the optimal policy for a decision maker is to keep as rational as possible when making inter-temporal decisions.

Transaction or Membership?Impact on On-Demand Delivery Service Platforms'Profits,Consumer Surplus,and Labor Welfare

In recent years,two pricing policies are commonly adopted by on-demand delivery service platforms(e.g,Meituan PaoTui and Costco)that provide delivery services to heterogeneous customers via self-scheduling providers.One called"transaction-based"pricing policy(TBPP)allows the platforms to determine a per-service wage paid to providers and a price charged to customers for each transaction.The other one called"membership-based"pricing policy(MBPP)also allows the platforms to announce a wage paid to providers but charge customers a membership fee for using an unlimited number of the services in a certain period(e.g.,one month).This paper considers an on-demand delivery service platform with self-scheduling providers and two classes of customers(i.e.,regular and frequent customers).We aim to analyze and compare the platform's profits and welfare performances generated by the two pricing policies.If the number of regular customers and their preference for TBPP equal the number of frequent customers and their preference for MBPP,respectively,we show that compared with the MBPP,employing the TBPP is beneficial for the platform but is detrimental for customers and providers.However,adopting the MBPP(TBPP)can simultaneously benefit the platform,customers and providers if frequent customers'preference for MBPP is higher(lower)than regular customers'preference for TBPP or the number of frequent customers is larger(less)than regular customers.

Service-Cost-Sharing Contract Design for a Dual-Channel Supply Chain with Free Riding

This paper considers a dual channel supply chain,where a manufacturer sells a single product through his/her online channel and a traditional retailer,who provides consumers with pre-sale services.The manufacturer's online channel may free-ride the retailer's pre-sale service,which reduces the retailer's desired effort level,and hence may hurt the manufacturer's and the overall supply chain performance.Under both Manufacturer-and Retailer-Stackelberg settings,we study how the manufacturer designs a service-cost-sharing(SCS for brevity)contract to enhance the retailer's service effort level,and how free riding influences two members'optimal decisions.We design an algorithm for determining the two members’optimal decisions under each setting.The three main findings are found:(i)In the Manufacturer-Stackelberg setting,the SCS contract can enhance the retailer's service effort level and eliminate the negative impact incurred by free riding,but can't in the Retailer-Stackelberg setting,(ii)Under the SCS contract,the smaller the fraction of service cost the retailer is requested to share,the more detrimental to the retailer it will be under certain conditions.That is,the phenomenon called"counter-profit cost-sharing"appears,(iii)Both players like to act as a leader if the price competition between the two channels is not relatively very fierce,otherwise they both like to act as a follower.

How to Implement the Wholesale Price Contract: Considering Competition between Supply Chains

In this paper,we develop the price competition model of two supply chains,in which each supply chain includes one core manufacturer and one retailer,respectively.The manufacturer in each supply chain sells products to the retailer through a commonly-used wholesale price contract.Each manufacturer has two options to implement the wholesale price contract:playing the Stackelberg game with the retailer and playing the bargaining game with the retailer.Based on the manufacturer's two alternative performing modes in each supply chain,we consider four combined performing modes of two competitive supply chains in the model.By comparing equilibrium results,we find that when both manufacturers choose to bargain with retailers,the sales volume increases and the sales price decreases.Moreover,the manufacturers'mode option is affected by bargaining power,product quality level,and the cost of improving product quality.Specifically,when both bargaining power and the cost of improving product quality are relatively small,both manufacturers choose to play Stackelberg game with retailers.When manufacturers'bargaining power is sufficiently large,regardless of the cost of improving product quality,both manufacturers choose to bargain with retailers.Surprisingly,when the manufacturer chooses to bargain the wholesale price with the retailer,higher product quality is not always beneficial to the retailer because the retailer may have to share part of the cost of the manufacturer.