The optimal pricing strategy for two-sided platform delivery in the sharing economy

Ling-Chieh Kung and Guan-Yu Zhong

Transportation Research Part E: Logistics and Transportation Review, 2017, vol. 101, issue C, 1-12

Abstract: 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 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (62)

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DOI: 10.1016/j.tre.2017.02.003

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