Social and Health Services in the Platform: Developing a Concession Pricing Model for Eldercare Service Platforms

As eldercare service platforms (ECSPs) are becoming increasingly popular due to the rapidly ageing population, using only a single pricing strategy has resulted in a mismatch between bilateral users (providers and consumers) in these platforms. To address these challenges, multiple innovative pricing strategies, considering the characteristics of the consumers, service providers, governments, and the private sector should be formulated by governments. Therefore, based on social welfare maximisation, this study develops a concession pricing model for ECSPs that combines different government subsidy methods, platforms' service quality, network externalities, and price elasticity. The results suggest that ECSPs should set a higher price for the group with more significant network externalities and a lower price for the group with more negligible network externalities. The optimal concession price decreases with service quality, while the size of bilateral users increases with service quality. It is further found out that governments should prioritise subsidising eldercare services with a low price elasticity of demand to improve subsidy efficiency, and that their subsidies can expand the size of bilateral users, decrease the concession prices, and improve social welfare. This study contributes to the body of knowledge of public services by proposing a concession pricing model for ECSPs, adding further evidence to the discussion about social and health services in platform. In practice, the findings would be of utmost interest to governments and the private sector that need to make more informed pricing decisions to improve the efficiency of eldercare services provision and maximise platform profit.