How to charge doctors and price medicines in a two-sided online healthcare platform with network externalities?

Li, Jianbin; Hu, Fangying; Yan, Tingting; Cai, Xueyuan; Song, Xiangrong

doi:10.1080/00207543.2022.2077151

Cited by 11 publications

(2 citation statements)

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“…The platforms are no longer limited to traditional basic service functions and provide more VASs to enhance their competitive advantage. Recently, the research on VAS decision-making of two-sided platforms has been highly valued by scholars (Dou et al, 2018;Li et al, 2022Li et al, , 2023Sui et al, 2023;Zhang et al, 2021).…”

Section: Value-added Service Of Two-sided Platformmentioning

confidence: 99%

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Value-added service investment and pricing decisions in two-sided platform: the role of user expectations

Gui

Zhai

Dong

et al. 2023

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PurposeThis paper aims to investigate how user expectations affect value-added service (VAS) investment and pricing decisions of two-sided platforms. It draws on the information asymmetry theory and offers suggestions on how platform operators can manage user expectations.Design/methodology/approachAccording to the game theory, this study considers three user expectations (responsive, passive and wary). By framing the Hotelling duopoly model and comparing the VAS investment, price and platform profits, the optimal platform decision is analyzed and discussed.FindingsThe conclusions demonstrate that the monopolistic two-sided platform obtains more profits from the informed users with responsive expectations than uninformed users with passive or wary expectations. The marginal investment cost and cross-network externalities are two key factors that determine the platform's VAS investment and pricing strategies of passive or wary users. Furthermore, considering the expectation preferences, i.e. the uniformed users hold wary expectations with more information and hold passive expectations with less or no information, the results suggest that the proportion of wary users to all uninformed users increases the platform's VAS investment, profits and the price of informed users, and increase (decrease) the price of uninformed users when the cross-network externalities of informed users are relatively small (larger).Practical implicationsThese results can provide insightful enlightenment into how platform operators utilize bilateral users' expectations and information level to guide their VAS investment and pricing decisions.Originality/valueThis paper is one of the first to explore the impact of three user expectations and the heterogeneity of preferences in informing users' passive or wary expectations, based on different levels of information on the decision-making of two-sided platforms regarding VAS.

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Section: Value-added Service Of Two-sided Platformmentioning

confidence: 99%

“…Recently, the research on VAS decision-making of two-sided platforms has been highly valued by scholars (Dou et al ., 2018; Li et al. , 2022, 2023; Sui et al ., 2023; Zhang et al ., 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Value-added service investment and pricing decisions in two-sided platform: the role of user expectations

Gui

Zhai

Dong

et al. 2023

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Price regulation, network externality, and product innovation strategies: A dynamic analysis

Ge,

2024

Manage Decis Econ

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For many high‐tech and Internet‐related products, consumers' utility depends partly on the scale of user groups, which is called network externality. This phenomenon plays a crucial role in shaping firms' innovation strategies, especially in markets with price regulation. This paper aims to investigate a monopolist's dynamic product innovation problem in a price‐regulated market exhibiting network externality. We identify the sufficient conditions guaranteeing the existence of optimal steady‐state equilibrium. Our analysis mainly shows the following: (i) the product quality and network size move in opposite directions along the path to the steady‐state equilibrium; (ii) the equilibrium result of product innovation increases with the regulated price but decreases with the intensity of network externality; (iii) the social‐welfare maximizing path of product innovation can be replicated by a dynamic price regulation regime, involving a premium on quality and a premium or a penalty on network size. Numerical experiments are performed to characterize the dynamic patterns of product innovation. We find that firms with high brand power prefer adopting mild product innovation strategy while for firms with low brand power, almost constant high‐quality strategy is better.

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Pricing and Quality Strategies in Crowdfunding with Network Externality

Wang

Zhou

2022

J Optim Theory Appl

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How to charge doctors and price medicines in a two-sided online healthcare platform with network externalities?

Abstract: In the fixed pricing scheme, the online pharmaceutical platform chooses the optimal medicine retailing price (p) and settlement fee (w) to maximize its expected profit with constraints, which can be expressed as follows:

Cited by 11 publications

References 50 publications

Value-added service investment and pricing decisions in two-sided platform: the role of user expectations

Value-added service investment and pricing decisions in two-sided platform: the role of user expectations

Price regulation, network externality, and product innovation strategies: A dynamic analysis

Pricing and Quality Strategies in Crowdfunding with Network Externality

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