The Optimal Pricing Strategy for Two-Sided Platform Delivery In the Sharing Economy
Transportation Research Part E 101 1-12
25 Pages Posted: 14 Mar 2017 Last revised: 24 Apr 2018
Date Written: February 15, 2017
Nowadays many platforms emerge to provide delivery services by having independent shoppers to deliver groceries from independent retailers to consumers. To understand how to price this service, we formulate a two-sided platform's profit maximization problem by considering network externality. We focus on three pricing strategies, membership-based pricing, transaction-based pricing, and cross subsidization. When time discounting is absent and consumers' order frequency is price-insensitive, it is shown that these three strategies are equivalent. As membership-based pricing collects money the earliest and maximize price-sensitive order frequency, our analysis explains some platforms' promotion of it.
Keywords: sharing economy, delivery service, two-sided platform, network externality, game theory
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