Strategies for dynamic pricing competition between differentiated sellers: Considering platform fees and strategic consumers

Haijun Chen and Qi Xu

Managerial and Decision Economics, 2024, vol. 45, issue 2, 608-623

Abstract: In the dynamic realm of the platform economy, the intricate relationship between platform charging mechanisms, seller tactics, and consumer behavior is crucial. This study delves into this relationship by constructing a two‐period dynamic game model, examining how different platform charging approaches impact pricing strategies among two distinct sellers, all while considering consumer strategic actions. Our findings reveal that the combination of seller quality differentiation and platform charging methods profoundly shapes consumer strategic actions. Interestingly, strategic consumers do not invariably harm seller profits. In specific settings, such as when using a revenue‐sharing model with slight quality differentiation, high‐quality sellers might even reap greater benefits than when dealing with short‐sighted consumers. Moreover, the decision for sellers to adhere to a specific price isn't always advantageous. For instance, under a revenue‐sharing model with limited competition, a price commitment from a lower quality seller might backfire. Additionally, in scenarios with a fixed‐fee model, there's a noticeable lack of incentive for differentiated sellers to commit to prices. This study accentuates the subtle yet significant influence of consumer strategic actions on seller profits in the platform economy context. It underscores the imperative for both sellers and platforms to remain vigilant and adaptive, ensuring their strategies resonate with the ever‐evolving consumer behaviors.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/mde.4021

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:45:y:2024:i:2:p:608-623

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().