Research On Pricing Strategy Of Two-sided Platform Leader Toward Users

The Internet provides an unprecedented opportunity for the generation and development of platform, which is sweeping the globe with incredible scale and speed. Future competition between enterprises, to a large extent, will be the competition between platforms. Platform leader, as the provider of core functions and controller of the platform, designs effective mechanisms to promote the efficient interaction between two-sided users and meet users'requirements, creates a complete platform ecosystem, eventually constructs a unique profit model. Formulating rational and effective pricing strategy is an important link of mechanism design for platform leader, is also an important way to obtain the platform competitive advantage. As a result, revealing the pricing strategy of platform leader toward users and its decision factors has important theoretical and practical significance for the healthy development of platform leader and the whole platform ecosystem.Based on existing research, firstly, we give a systematic introduction of two-sided market theory, network externality theory, platform and platform competition theory, summarize research findings including the development of two-sided platform and software platform, platform pricing strategy and method. Then we define the attributes of two-sided platform products and users, analyze pricing structure and the choice of pricing strategy of platform leader toward users, on this basis, we construct a model of the pricing strategy of dominant enterprise toward two-sided users that takes the software platform as an example and a model of two-stage pricing strategy of dominant enterprise with switching cost with simulation analysis which disclose the pricing strategy of platform leader and its factors. Finally, we take mobile operating system platform, instant messaging platform and e-commerce platform as the case study objects to verify the theoretical reasoning and model.Taking software platform as an example, the indirect network externality of developer has a positive effect on the revenue sharing proportion they get, while has a negative effect on the access fee of two-sided users; platform matching capability has a positive impact on the access fee of two-sided users, but has a negative impact on the revenue sharing proportion developers receive; platform difference in the end users' side has a positive impact on their access fee, but has a negative impact on the revenue sharing proportion developers receive, the effect of platform difference in the developers'side on two-sided pricing depends on developers'indirect network externality and their vested options. In the case of two-stage pricing, due to the presence of switching costs, platform leader often adopt low price or free strategy in the first stage, and then raise the price in the second stage; platform compatibility has a positive impact on the price of dominant enterprise towards two-sided users; the effect of switching cost on two-sided pricing depends on the difference of platform user base, which have important enlightenment for two-sided platform leader on differentiation, compatibility and pricing structure decision-making.