The optimal pricing strategy for two-sided platform delivery in the sharing economy
Journal
Transportation Research Part E: Logistics and Transportation Review
Journal Volume
101
Pages
1-12
Date Issued
2017
Author(s)
Zhong, G.-Y.
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.
Type
journal article
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