The Complex Dynamics of Sharing Platform Competition Game

With the rapid development of Internet technologies and online sharing platforms, sharing economy has become a major trend in economy. The entry of sharing economy leads to profound impacts on incumbent industry. We build a dynamic sharing platform competition model with which agents are bounded rational, and consumer side is heterogeneous. Then, we present the fixed points and the stability conditions of the bifurcation of the dynamic model. We simulate the adjustment speed of sharing platform, sharing platform price, and costs of traditional firm effects on system stability, and we present stable area, bifurcation diagram, the largest Lyapunov exponent, and strange attractor of different parameters, and we give a feedback control method at last. Our main results are as follows: (1) when adjustment speed of sharing platform increases, the system becomes bifurcation, and finally, the system goes into a chaotic state; when the system is stable, price of traditional firm and fee decision of sharing platform are constant. (2) When price of sharing platform increases, sharing platform is more stable while traditional firm is more vulnerable. Suppose the system is in the stable state; when sharing platform price increases, traditional firm price increases, while sharing platform fees decreases. (3) When traditional firm cost is small, the system would be more stable. When the system is stable, with traditional firm cost increasing, traditional firm price increases quicker than sharing platform consumer fee, while sharing platform seller fee decreases. (4) Feedback control can alleviate the chaotic state of system. With feedback control parameter increases, the system becomes more stable.

Platform Competition Under Network Effects: Piggybacking and Optimal Subsidization

A repeated challenge in launching a two-sided market platform is how to ignite the cross-side network effects to jump-start adoption. This research note studies “piggybacking”—expanding the focal market to recruit exclusive users from external networks—as a new and nonpricing control to launch platforms in conjunction with pricing controls. We first consider consumer-side piggybacking. Our results provide a rich set of novel insights into strategies that platforms use to monetize exclusive access to external users with nontrivial characterizations of the interplay among piggybacking, cross-side network effects, and price competition. We identify conditions when piggybacking is profit improving and when it leads to a prisoner’s dilemma, depending on the piggybacking cost and strengths of cross-side network effects. Among others, we show that piggybacking may intensify rather than ease price competition. We then consider provider-side piggybacking, and we show that the insights are qualitatively the same as consumer-side piggybacking except that the prisoner’s dilemma disappears if piggybacking providers multihome.