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Full-Text Articles in Computer Sciences
Platform Pricing With Endogenous Network Effects, Mei Lin, Ruhai Wu, Wen Zhou
Platform Pricing With Endogenous Network Effects, Mei Lin, Ruhai Wu, Wen Zhou
Research Collection School Of Computing and Information Systems
This paper examines a monopoly platform’s two-sided pricing strategy through modeling the trades between the participating sellers and buyers. In this approach, the network effects emerge endogenously through the equilibrium trading strategies of the two sides. We show that platform pricing depends crucially on the characteristics associated with market liquidity, including both sides’ entry costs, the buyers’ preferences, and the distribution of the sellers’ quality. The platform may subsidize sellers if the market is sufficiently liquid, whereas buyer subsidy can be optimal given an illiquid market. We also illustrate the impact of the sellers’ quality heterogeneity on the platform’s optimal …
Managing Seller Heterogeneity In A Competitive Marketplace, R. Wu, Mei Lin
Managing Seller Heterogeneity In A Competitive Marketplace, R. Wu, Mei Lin
Research Collection School Of Computing and Information Systems
The growth of online marketplaces is accompanied by significant heterogeneity of the third-party sellers. The marketplace owner often applies policies that favor the sellers who offer higher values to buyers, which puts the lower-value sellers at an even greater disadvantage. This leads to the phenomenon of Matthew Effect. Our study focuses on a marketplace owner’s policy in managing seller heterogeneity and analyzes Matthew Effect in a competitive market environment. By extending the circular city model, we analytically examine the price competition among a large number of sellers that differ both in variety and in their value offerings. We present the …
Platform Regulation On Seller Heterogeneity, Ruhai Wu, Mei Lin
Platform Regulation On Seller Heterogeneity, Ruhai Wu, Mei Lin
Research Collection School Of Computing and Information Systems
On a "marketplace" platform, where two sides of users trade, the platform owner has an incentive to regulate its marketplace for a higher profit. This study focuses on a monopoly platform's nonpricing, regulatory strategies in governing quality heterogeneity of competing sellers. In contrast to related studies, we endogenize strategic interactions among platform users. Our model extends the circular city model to capture seller heterogeneity in both variety and quality. The closed-form equilibrium solution reveals a ripple effect that exerts competitive pressure from seller to seller at a diminishing magnitude. The equilibrium analysis enables us to connect the economic mechanisms in …