Optimal Pricing and Service Investment of Home-Sharing Platforms in a Duopoly Market

In this paper, we construct a fully covered duopoly market model. In this market, two home-sharing platforms provide differentiated rental services to consumers, respectively, and each platform has two strategies: short-term rental strategy and long-term rental strategy. This paper studies the pricing decisions and service investment of home-sharing platforms in a competitive market. The results show that, in the market equilibrium, how the platform chooses the strategy largely depends on the service quality of competitors. Specifically, when the difference in service quality is small, it is better for the two platforms to adopt the short-term rental strategy; otherwise, the two platforms are more inclined to adopt the long-term rental strategy. We also find that the commission rate and service cost will also affect the profitability of the platform. Finally, we extend the model to the uncovered market.

Planned Obsolescence with Network Effects

This paper appeals to the interplay between network effects and quality to justify the use of planned obsolescence by well-settled firms. We propose a simple contagion model to analyze an asymmetric duopoly market where an incumbent firm benefits, at least initially, from the first‐mover advantages attributed to network industries, while the entrant offers a product with higher quality. The simpler version of the model describes the evolution of the market shares, showing that network effects can overtake the quality effect if the market is sufficiently small. If the market lasts enough, network effects end up enhancing the effect of quality and the entrant gets a higher market share. If the incumbent can set the size of the market by launching a new product every so often, the model provides a rationale for the use of planned obsolescence from a strategic point of view. Social efficiency is then challenged.

CSR leadership, spillovers, and first-mover advantage

In this paper, I study the conditions under which a CSR leader, that is a firm which commits to invest in socially responsible activities prior to its competitor, can develop a first-mover advantage. A price-setting duopoly market with horizontally differentiated products is considered, where firms can increase the willingness to pay of the consumers of their products by investing in socially responsible activities. It is shown that if the investment in CSR is perfectly specific to the CSR leader and does not spill over to the CSR follower, the CSR leader achieves higher profits. Hence, a first-mover advantage arises. If however, CSR investment spills over to and hence benefits also the CSR follower by increasing the follower sales, then a second-mover advantage might arise for the follower. A characterization is provided for the influence of the intensity of competition and the level of spillovers on the relative and absolute level of CSR activities and the firms’ incentives to engage in CSR.

Pricing and Return Policies in a Competitive Market: A Consumer-Valuation Based Analysis with Valuation Uncertainties

In this study, we develop a series of consumer-valuation-based models to investigate the pricing and return policies of the sellers in a competitive e-commerce market. Differing from the competition models in literature, a novel two-dimensional valuation structure is built, which considers the valuations of a consumer on two products and the valuation differentiation of all consumers on each product. We consider both monopoly and duopoly (competitive) markets. In each market, two models are respectively developed, one with and one without the return policies. We derive the solutions for the four models, and conduct some analytical and numerical investigations. The results show that return policy with a partial refund is always chosen by the sellers in both monopoly and duopoly markets. Return policy benefits the seller in a monopoly market, but may not benefit the sellers in a duopoly market. In the duopoly models, one seller can be considered as a monopoly seller who meets a new competitor. Our results show that the monopoly seller will reduce its price by no more than 20% when there comes a competitor, and, counter-intuitively, it will meanwhile adopt a severer return policy to the consumers.