Will dynamic pricing outperform? Theoretical analysis and empirical evidence from O2O on-demand food service market

Tingting Tong, Hongyan Dai, Qin Xiao and Nina Yan

International Journal of Production Economics, 2020, vol. 219, issue C, 375-385

Abstract: This study attempts to identify the pricing strategy of three most-commonly used on-demand food service platforms in China based on detailed information of more than 240,000 orders, and further evaluates the impact of pricing strategy on platform performance. We find that some platforms adopt dynamic pricing strategies, while other platforms adopt static pricing strategies. Considering the unique structure of the O2O on-demand food service market in China, we develop a dyadic two-sided market theory and demonstrate that compared with static pricing strategies, dynamic pricing strategies perform better. Consistent with our theory, our empirical analysis also suggests that platforms adopting dynamic pricing strategies have a significantly higher level of demand compared with platforms adopting static strategies. In addition, our results indicate the importance of delivery speed, red envelopes, and ratings in promoting demand.

Keywords: On-demand platforms; Dynamic pricing; Two-sided market; Food service (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527319302476
Full text for ScienceDirect subscribers only

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:eee:proeco:v:219:y:2020:i:c:p:375-385

DOI: 10.1016/j.ijpe.2019.07.010

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().