A study of pricing strategy in platform business: a multi-agent simulation approach
by Motoki Sasagawa; Tomoko Kajiyama; Noritomo Ouchi
International Journal of Technology Marketing (IJTMKT), Vol. 9, No. 4, 2014

Abstract: The platform business has attracted an increasing amount of attention from industry professionals and academics alike. Although a low pricing strategy is effective for increasing the number of users in the platform business, it remains unclear if a low pricing strategy increases profits for platform providers. To address this issue, we employed multi-agent simulation techniques to analyse the influence of pricing strategy on platform provider's profit. First, we constructed a user behavioural model which incorporates both cross-side network effects and same-side network effects. In this model, we treated consumers, suppliers, and advertisers as platform users. Next, the simulations demonstrated that a low pricing strategy generates greater profit than a high pricing strategy when the suppliers' and advertisers' same-side network effects are negative. Taken together, the results of this study suggest that platform providers must choose a pricing strategy on the basis of the impact of same-side network effects.

Online publication date: Fri, 31-Oct-2014

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Technology Marketing (IJTMKT):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com