Firm Discrimination Pricing Strategies with Network Effect

2006 ◽  
pp. 941-944
Author(s):  
Xiao Jun Pan ◽  
Hong Min Chen ◽  
Li Xu
Keyword(s):  
Network Effect ◽  
Pricing Strategies

scholarly journals Coordinating Demand and Supply for Crowd Logistics Platforms with Network Effect

2021 ◽  
Vol 2021 ◽  
pp. 1-14
Author(s):  
Wenjie Wang ◽  
Lei Xie
Keyword(s):  
Network Effects ◽  
Service Providers ◽  
Negative Impact ◽  
Positive Impact ◽  
Network Effect ◽  
Pricing Strategy ◽  
Pricing Strategies ◽  
Demand And Supply ◽  
Direct Network ◽  
Crowd Logistics

The crowd logistics platforms connect stochastic demand with uncertain delivery supply which is provided by independent service providers. Considering direct-network effects and cross-network effects between the demand and supply side, a dynamic surge pricing model for crowd logistics platforms is built. The pricing strategy is derived to coordinate the supply with demand to equilibrium. Furthermore, the pricing strategy minimizing cumulative delivery orders is analyzed. The numerical simulation results show that the dynamic surge pricing strategies can stimulate the uncertain delivery supply for maximizing platforms’ revenue. And, direct-network effects pose a positive impact on the dynamic surge pricing strategy. In contrast, the cross-network effects have a negative impact on the pricing strategy. However, direct-network effects and cross-network effects negatively influence platforms’ revenue.

Pricing Strategies of Unbundling and Mixed-Bundling in a Two-Sided Market Under Stochastic Demand

2020 ◽  
Vol 37 (03) ◽  
pp. 2050016
Author(s):  
Xiaogang Lin ◽  
Yong-Wu Zhou ◽  
Qiang Lin
Keyword(s):  
Stochastic Demand ◽  
Sharp Contrast ◽  
The Other ◽  
Network Effect ◽  
Pricing Strategy ◽  
Pricing Strategies ◽  
Royalty Rate ◽  
Mixed Bundling ◽  
The Impact ◽  
Two Sided Markets

We investigate the pricing strategies of unbundling and mixed-bundling for a firm that produces both a product and a compatible integrated content, respectively. The firm can be viewed as a two-sided transaction platform between sellers and customers, and decides whether to sell the product and the integrated content separately or jointly. Sellers develop independent content and are charged a per-unit royalty rate for each transaction on the platform, and customers are required to pay the prices for the product and the contents. With the consideration of stochastic demand, we study the impacts of cross-side network effect on the pricing strategies of unbundling and mixed-bundling, respectively. Moreover, we compare the impact of unbundling and mixed-bundling on the pricing strategy of the platform. Compared with no cross-side network effect, we show that the firm (with unbundling and mixed-bundling) need not subsidize customers and sellers in the presence of the effect under certain conditions, indicating that it can extract the most surplus from both sides to maximize the profit. This stands in sharp contrast to the finding of the literature on two-sided markets that the platform should subsidize one side of the market in order to make profit from the other side. Moreover, our result suggests that mixed-bundling can help the firm make more profit with fewer products by subsidizing one side of the market compared with the unbundling.

scholarly journals Optimal Software Feature-Limited Freemium Model Design: A New Consumer Learning Theoretical Framework

Mathematics ◽  
2021 ◽  
Vol 9 (9) ◽  
pp. 944
Author(s):  
Kang Li ◽  
Jingwei Zhang ◽  
Lunchuan Zhang
Keyword(s):  
Software Industry ◽  
Network Externality ◽  
Network Effect ◽  
Pricing Strategies ◽  
Consumer Learning ◽  
Prior Beliefs ◽  
Free Trial ◽  
Learning Framework ◽  
Strategy Design ◽  
New Consumer

The software industry is increasingly adopting a feature-limited freemium business model that combines “free” and “premium” contents in one product, to sell its products. How to determine the optimal product quality differences between the free and premium versions of software is a central business problem facing many software vendors. In this paper, we study the optimal feature-limited freemium software strategy design, as well as the associated pricing strategies based on consumer learning and network externality effects. We propose a new consumer learning framework induced by cross-module synergies that contains both direct and indirect learning processes. By employing a two-stage mathematical theoretical model and a numerical analysis method, we gained some insights regarding the feature-limited free trial strategy design and associated pricing strategies while considering the associated trade-off between the benefits and costs of the free trial strategy. In our modeling and numerical results, consumers’ prior beliefs about the quality of premium content before the free trial, network effect intensity, and indirect learning intensity were found to be three conditions that need to be studied to examine software vendors’ management decisions. For the software industry, the quality difference between free and premium functionality or the service and price strategy for a feature-limited free trial model can be designed while considering these factors, which will provide some useful guidelines for the industry.

Firm Discrimination Pricing Strategies with Network Effect

2006 ◽  
Vol 532-533 ◽  
pp. 941-944
Author(s):  
Xiao Jun Pan ◽  
Hong Min Chen ◽  
Li Xu
Keyword(s):  
Social Welfare ◽  
Price Discrimination ◽  
Equilibrium Price ◽  
Network Effect ◽  
Pricing Strategy ◽  
Pricing Strategies ◽  
Uniform Pricing ◽  
Competitive Price ◽  
The Social ◽  
Differentiated Goods

We explore the price and welfare effect of price discrimination in a differentiated-goods oligopoly market with network effect and the effect of network effect on the equilibrium price, profit and output. We show that competitive price discrimination and network effect may intensify competition and the price discrimination increases the social welfare under oligopoly market with network effect. If firms differ in which markets they target for aggressive pricing strategy and competitive firm’s reaction is strong, prices in all markets may fall. So both firms agree on the strategies of setting the uniform pricing.

Principles for sharing economy formation in the digital society

2020 ◽  
Vol 16 (5) ◽  
pp. 800-821
Author(s):  
E.V. Popov ◽  
K.A. Semyachkov
Keyword(s):  
Network Effects ◽  
Sharing Economy ◽  
Network Effect ◽  
Industrial Society ◽  
Economic Activities ◽  
Digital Platforms ◽  
Digital Society ◽  
Modern Economy ◽  
Characteristic Features ◽  
The Impact

Subject. The article addresses economic relations that are formed in various areas of economic application of digital platforms. The target of the research is the modern economy of digital platforms across different economic activities. Objectives. The aim is to systematize principles for share economy formation in the context of the digital society development. Methods. We employ general scientific methods of research. Results. The study shows that the development of digital platforms is one of the most important trends in the development of the modern economy. We classified certain characteristic features of modern digital platforms, analyzed principles for their creation. The paper emphasizes that the network effects achieved through the use of digital platforms are an important factor in the development of the share economy. The network effect describes the impact of the number of the platform users on the value created for each of them. The paper also considers differences in the organization of traditional economy companies and companies that are based on the digital platform model, reveals specifics of changes in socio-economic systems caused by the development of digital platforms, systematizes principles of the sharing economy formation in the context of the digital society development. Conclusions. The analyzed principles for sharing economy development on the basis of digital platforms can be applied to create models for the purpose of forecasting the transformation of economic activity in the post-industrial society.

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