A Study On Pricing Strategy Of O2O Platforms Based On Two-sided Markets Theory

The rapid development of information network technology and big data processing technology has promoted the emergence of O2O e-commerce platform.AS a new type of e-commerce platform after B2B?B2C and C2C,O2O platform has the typical characteristics of two-sided market.Although O2O platform's core issues are also pricing and pricing strategy,unlike other platforms,the influences differ from traditional two-sided markets.First,a participant not only care about the number of the other side but also care about the number of his side;second,with the rapid development of information technology,especially the popularity of smartphones and extensive wireless network,buyers usually install several similar APPs.As a result,O2O e-commerce platform has the characteristics of indirect network externalities,direct network externalities and partial mutihoming at the same time.However,the existing research on competition pricing usually focus on one of those three characteristics,neglecting the comprehensive influence of those three characteristics.Therefore,it's difficult for the existing theory to fully explain the operation of O2O platform.In this paper,unlike the existing literature,a two-stage game model of O2O competitive platforms featured with horizontal differentiation is constructed to further characterize both the indirect network externality,direct network externalities and partial multihoming characteristics and analyze their impacts on equilibrium price,which tries to explore the pricing'strategy of the O2O platform more accurately and puts forward the correspondingpolicy recommendations for the anti-monopoly agencies.The study found that:due to the existence of indirect network externalities and direct network externalities,both monopoly platform and competitive platform adopt "tilting pricing strategy" that is,the platform subsidys one side of the participants(or even for free)and solely charges the other sidde,which is different form the marginal cost pricing principle in one-sided markets.In addition,when the participants from both sides are single homing,platform acquired its highest profit;when the participants from both sides are partial multihoming,platform acquired lowest margin.Therefore,O2O competitive platform has incentive to reduce the motivation of participants to be partial multihoming.In reality,pricing is the comprehensive influence of many factors.with horizontal differentiation,the paper analyzes the comprehensive influence of both indirect network externality,direct network externalities and partial multihoming on platform pricing and further illustrates the O2O e-commerce platform's tilting pricing strategy.What's more,as the platform has the incentive to reduce participant's will of partial multihoming,anti-monopoly agencies should be vigilant against the platform's exclusive behaviors as well as the horizontal merger between platforms.Therefore,this study of O2O e-commerce platform pricing strategy will enrich the two-sided markets theory and will provide a new perspective for the research of O2O e-commerce platform inherent law.This study is divided into five sections.Section 1 is the O2O e-commerce platform's research background and meaning;section 2 is the summary of the two-sided markets theory;section 3 analyses the pricing of monopoly platform and introduces the platform structure and the characteristics of the O2O e-commerce platform;section 4 explores the pricing of competitive platform;section 5 summarizes the conclusions obtained in this paper and puts forward some policy recommendations.Section 3 and section 4 are the core sections of this paper.