Pricing Strategies Of Online Shopping Platforms In Two-sided Markets

In the21st century, online shopping market is of a rapid development in China. These shopping sites have a short history of development just about ten years. After the survival of the fittest, there have appeared some powerful shopping sites. All these indicate that the online shopping market has intense competition and rapid development. As a new subject in the industrial organization theory, two-sided markets theory has got much attention from scholars. The main research object is the economic behaviors of consumers’transactions through the platform which has the marked features of externality and pricing structure. Online shopping platforms also have significant two-sided markets structure. And the distinctive characteristics are network externalities, multi-homing, non-neutral pricing structure, end-users’complementary demand and so on. The two-sided markets theory should be applied to analyze the platforms’economic behaviors.Combining with the conditions of online retail markets, this article analyze pricing factors on the platforms under the premise of the review of two-sided markets and preference theory. China is a populous country. Base on so large scale and so fast growth of online shopping consumers, it is obviously that their economic behaviors have a significant impact on the platform pricing strategies. On the basis of preference’ differences combining with the previous studies, and joining the preference parameters, this paper focuses on researching the platforms’profit-maximizing pricing strategies in the case of preference heterogeneity. Through simulating Armstrong’s non-neutral pricing structure model, platforms’asymmetric pricing has been further confirmed. This article establishes the two-sided markets pricing model to analyze the impact of intra-group network externality and end-users’preference on platforms’pricing under monopoly and duopoly market structures. Besides this, this paper also studies the difference between monopoly and duopoly platforms. On the conditions of saturated sellers in the monopoly market and unsaturated sellers in duopoly market, sellers’ intra-group network externality has different relationships of the pricing structure. Finally, the data simulation validates the results which were achieved by established pricing structure and calculated formulas, and also gets some relationships among these parameters that relationships can’t be gotten by the former calculation. At the end of this article points out the deficiencies of this text and the future directions of research.