A Study On Performance Investment And Pricing For Two-sided Platforms

With the rapid development of network technology and service technology, great changes have happened in the economic operation mode of each country and enterprise. In the modern economy, two-sided platform is becoming more and more important, and has been widely concerned. Such as shopping websites, bank card systems, video game platforms and dating platforms, these platforms connect to a plurality of users’demand in different markets, and there are some interactions between these users. These two-sided market platform enterprises gradually dominate the market. We will study these platforms in this article.In recent years, there are many researchers studying two-sided platform. But the growing literature on two-sided markets has focused on platform sponsors’novel two-sided pricing strategies. Relatively little work has been done to explore the use of non-price controls in two-sided markets. Though a recent body of work discusses the non-price levers platform sponsors can use to create more attractive bundles for end users, the role of platform characteristics such as platform features and performance has yet to be fully explored. So the research in this area is particularly important.Firstly through the observation of the two-sided platforms in our real economy. It is found that the phenomenon existing in the operation of the platforms, namely for some two-sided platforms, such as video game platform, iOS operating system platform, a high level of performance is helpful to attract more consumers, but in many cases it requires developers to make large investments to participate. Based on this, this article establishes the model of platform’s performance investment and pricing, and we try to solve the contradiction between the increase of users’utility and the cost of the developers.The result shows that platform’s performance investment and pricing strategy depends on two different expectations, favorable expectations and unfavorable expectations. Under favorable expectations, when the users of platform prefer content diversity of developers, platform sponsors do not necessarily reduce platform’s performance investment in order to attract more developers. To meet certain conditions, they will increase the investment of the platform’s performance. It suggests that platforms must carefully analyze the indirect feedback from the developer side to avoid making wrong platform development decisions. Under unfavorable expectations, in order to eliminate the unfavorable expectations, platform sponsors can take seller subsidy strategy or buyer attraction strategy. These two strategies are to convince developers to join the platform even in the case of unfavorable expectations.