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The optimal pricing strategy for two-sided platform delivery in the sharing economy

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  • Kung, Ling-Chieh
  • Zhong, Guan-Yu

Abstract

Nowadays many platforms emerge to provide delivery services by having independent shoppers to deliver groceries from independent retailers to consumers. To understand how to price this service, we formulate a two-sided platform’s profit maximization problem by considering network externality. We focus on three pricing strategies, membership-based pricing, transaction-based pricing, and cross subsidization. When time discounting is absent and consumers’ order frequency is price-insensitive, it is shown that these three strategies are equivalent. As membership-based pricing collects money the earliest and maximize price-sensitive order frequency, our analysis explains some platforms’ promotion of it.

Suggested Citation

  • Kung, Ling-Chieh & Zhong, Guan-Yu, 2017. "The optimal pricing strategy for two-sided platform delivery in the sharing economy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 1-12.
    • Handle: RePEc:eee:transe:v:101:y:2017:i:c:p:1-12
    DOI: 10.1016/j.tre.2017.02.003
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    References listed on IDEAS

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