Publications
Scientific publications
Konovalchikova, E., Ivashko, A.
Pricing in Two-Sided Markets on the Plain with Different Agent Types
// Mathematical Optimization Theory and Operations Research. 21st International Conference, MOTOR 2022, Petrozavodsk, Russia, July 2–6, 2022, Proceedings. Lecture Notes in Computer Science, vol 13367. Springer, Cham, 2022. P. 194–209
Keywords: Two-sided platform market, Network externalities, Pricing, Hotelling’s duopoly, Nash equilibrium, Optimal location of platforms
The article investigates the price equilibrium in two-sided markets of platforms with cross-side network effects for users from different groups. The focus is on the problem of optimal pricing in two-sided markets where the location of platforms for different types of agents is taken into account.
The model deals with agents belonging to two groups, who are evenly distributed on the plane of the circle. Agents from both groups choose between two platforms, their rationale being the utility they can derive from visiting the platforms. The agents’ utility function is constructed with Hotelling’s specification involved, and therefore includes the value of the network effect from the interaction of one group with members of the other and the total costs of visiting the platforms, including transport costs. The payoff of each platform depends on the number of agents of both groups on the platform, the entry fee, and the costs of servicing the users.
We find the optimal two-sided market pricing strategies for symmetrically located platforms for two scenarios. In the first case agents from both groups can join only one platform, whereas in the second case members of the second group can join both platforms simultaneously. Numerical results for different parameters of the problem are compared.
The model deals with agents belonging to two groups, who are evenly distributed on the plane of the circle. Agents from both groups choose between two platforms, their rationale being the utility they can derive from visiting the platforms. The agents’ utility function is constructed with Hotelling’s specification involved, and therefore includes the value of the network effect from the interaction of one group with members of the other and the total costs of visiting the platforms, including transport costs. The payoff of each platform depends on the number of agents of both groups on the platform, the entry fee, and the costs of servicing the users.
We find the optimal two-sided market pricing strategies for symmetrically located platforms for two scenarios. In the first case agents from both groups can join only one platform, whereas in the second case members of the second group can join both platforms simultaneously. Numerical results for different parameters of the problem are compared.
Indexed at Web of Science, Scopus, RSCI
Last modified: January 26, 2023