Optimal revenue sharing in platform markets: a Stackelberg model

Minhyuk Sur (gwsky7@snu.ac.kr), Deok-Joo Lee (leedj@snu.ac.kr) and Kyung-Taek Kim (ktkim@kier.re.kr)
Additional contact information
Minhyuk Sur: Seoul National University
Deok-Joo Lee: Seoul National University
Kyung-Taek Kim: Korea Institute of Energy Research

Journal of Revenue and Pricing Management, 2019, vol. 18, issue 4, No 5, 317-331

Abstract: Abstract Because of its ability to generate many revenue streams, the platform business has received much attention in recent years, and the revenue sharing problem between platform providers and service providers is a key issue. We adopted the Stackelberg model to analyze the optimal revenue sharing rates between these two parties when the platform provider acts as a leader, while the service providers are followers. We derive the closed form of optimal revenue sharing rates as the equilibrium of the Stackelberg model. Numerical experiments with graphical illustrations are presented to demonstrate the optimality of revenue sharing rates whereby the two parties maximize their own profits. In addition, on the basis of the results of optimal revenue sharing rates, the present study performs sensitivity analyses with regard to various exogenous variables that could affect the optimal revenue sharing rates. Our findings indicate that potential demand was the most significant factor in affecting optimal revenue sharing. Therefore, decision makers should carefully monitor their platform business markets to maximize the profits of all the parties involved.

Keywords: Revenue management; Revenue sharing; Platform business; Stackelberg model (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1057/s41272-018-00180-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:pal:jorapm:v:18:y:2019:i:4:d:10.1057_s41272-018-00180-4

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41272

DOI: 10.1057/s41272-018-00180-4

Access Statistics for this article

Journal of Revenue and Pricing Management is currently edited by Ian Yeoman

More articles in Journal of Revenue and Pricing Management from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).