Open Access. Powered by Scholars. Published by Universities.®
Physical Sciences and Mathematics Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Physical Sciences and Mathematics
Dynamic Two-Sided Pricing Under Sequential Innovation, Mei Lin, Xiajun Pan
Dynamic Two-Sided Pricing Under Sequential Innovation, Mei Lin, Xiajun Pan
Research Collection School Of Computing and Information Systems
Many two-sided platforms offer innovative hardware products that improve in quality and enter the market sequentially. We analyze the impact of the decrease in the production cost on a monopoly platform owner's dynamic two-sided pricing problem, in which buyers are strategic and exert a cross-side network effect to the seller side. Our findings show that a greater decrease in cost raises the optimal price of the low-quality product and allocates more buyer-side demand to the future market. Furthermore, such decrease in cost may also lead to a higher optimal price for the future higher-quality product, given a sufficiently significant quality …