IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v122y2019icp410-432.html
   My bibliography  Save this article

Pricing decisions for service platform with provider’s threshold participating quantity, value-added service and matching ability

Author

Listed:
  • Liu, Weihua
  • Yan, Xiaoyu
  • Wei, Wanying
  • Xie, Dong

Abstract

Affected by the online supply-demand matching, traditional pricing decisions cannot be applied to recent ‘online-to-offline’ (O2O) platforms, which should consider more about the features of the demander side, provider side and platform matching. Models with a profit-maximizing platform that considers the pricing decision effects of the provider’s threshold participating quantity, value-added service (VAS) and matching ability are developed in this study. Specifically, the main conclusions are divided into two parts: low-demand state and high-demand state. In the low-demand state, we show that the threshold participating quantity significantly affects pricing decisions when the basic demand is relatively low. There are two different critical values that make the pricing decisions into three cases. Second, regardless of the platform’s capital and the basic demand, the VAS always benefits the platform. Third, when the basic demand is relatively low and the threshold participating quantity is relatively high, the platform will not benefit from a higher matching ability, which is counter-intuitive. In the high-demand state, we show that the threshold participating quantity will not affect the pricing decisions. Second, developing the VAS still contributes to the improvement of platform’s profit. Third, different from the low-demand state, the platform’s profit always increases with the matching ability.

Suggested Citation

  • Liu, Weihua & Yan, Xiaoyu & Wei, Wanying & Xie, Dong, 2019. "Pricing decisions for service platform with provider’s threshold participating quantity, value-added service and matching ability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 410-432.
    • Handle: RePEc:eee:transe:v:122:y:2019:i:c:p:410-432
    DOI: 10.1016/j.tre.2018.12.020
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554518306033
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2018.12.020?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Reza Ahmadi & Foad Iravani & Hamed Mamani, 2017. "Supply Chain Coordination in the Presence of Gray Markets and Strategic Consumers," Production and Operations Management, Production and Operations Management Society, vol. 26(2), pages 252-272, February.
    2. Gérard P. Cachon & Kaitlin M. Daniels & Ruben Lobel, 2017. "The Role of Surge Pricing on a Service Platform with Self-Scheduling Capacity," Manufacturing & Service Operations Management, INFORMS, vol. 19(3), pages 368-384, July.
    3. Tomohiro Ando, 2018. "Merchant selection and pricing strategy for a platform firm in the online group buying market," Annals of Operations Research, Springer, vol. 263(1), pages 209-230, April.
    4. Shuya Yin & Saibal Ray & Haresh Gurnani & Animesh Animesh, 2010. "Durable Products with Multiple Used Goods Markets: Product Upgrade and Retail Pricing Implications," Marketing Science, INFORMS, vol. 29(3), pages 540-560, 05-06.
    5. Jiang, Yuanchun & Liu, Yezheng & Shang, Jennifer & Yildirim, Pinar & Zhang, Qingfu, 2018. "Optimizing online recurring promotions for dual-channel retailers: Segmented markets with multiple objectives," European Journal of Operational Research, Elsevier, vol. 267(2), pages 612-627.
    6. Guowei Dou & Ping He & Xiaoyan Xu, 2016. "One-side value-added service investment and pricing strategies for a two-sided platform," International Journal of Production Research, Taylor & Francis Journals, vol. 54(13), pages 3808-3821, July.
    7. Lin Hao & Hong Guo & Robert F. Easley, 2017. "A Mobile Platform's In‐App Advertising Contract Under Agency Pricing for App Sales," Production and Operations Management, Production and Operations Management Society, vol. 26(2), pages 189-202, February.
    8. Justin P. Johnson, 2011. "Secondary markets with changing preferences," RAND Journal of Economics, RAND Corporation, vol. 42(3), pages 555-574, September.
    9. Lifei Jiang & Stanko Dimitrov & Benny Mantin, 2017. "P2P Marketplaces and Retailing in the Presence of Consumers' Valuation Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 26(3), pages 509-524, March.
    10. Alawneh, Fawzat & Zhang, Guoqing, 2018. "Dual-channel warehouse and inventory management with stochastic demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 112(C), pages 84-106.
    11. Baojun Jiang & Lin Tian, 2018. "Collaborative Consumption: Strategic and Economic Implications of Product Sharing," Management Science, INFORMS, vol. 64(3), pages 1171-1188, March.
    12. Liu, Weihua & Wang, Di & Shen, Xinran & Yan, Xiaoyu & Wei, Wanying, 2018. "The impacts of distributional and peer-induced fairness concerns on the decision-making of order allocation in logistics service supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 116(C), pages 102-122.
    13. Yuhong He & Saibal Ray & Shuya Yin, 2016. "Group Selling, Product Durability, and Consumer Behavior," Production and Operations Management, Production and Operations Management Society, vol. 25(11), pages 1942-1957, November.
    14. Mehmet Gümüş & Saibal Ray & Shuya Yin, 2013. "Returns Policies Between Channel Partners for Durable Products," Marketing Science, INFORMS, vol. 32(4), pages 622-643, July.
    15. Rivera, Liliana & Sheffi, Yossi & Knoppen, Desirée, 2016. "Logistics clusters: The impact of further agglomeration, training and firm size on collaboration and value added services," International Journal of Production Economics, Elsevier, vol. 179(C), pages 285-294.
    16. Liu, Weihua & Liu, Xiaoyan & Li, Xiang, 2015. "The two-stage batch ordering strategy of logistics service capacity with demand update," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 83(C), pages 65-89.
    17. Xumei Zhang & Xiaopeng Han & Xiangyu Liu & Ru Liu & Jinzhong Leng, 2015. "The pricing of product and value-added service under information asymmetry: a product life cycle perspective," International Journal of Production Research, Taylor & Francis Journals, vol. 53(1), pages 25-40, January.
    18. Xiang Li & Yongjian Li, 2016. "Optimal service contract under cost information symmetry/asymmetry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(2), pages 269-279, February.
    19. Lin Tian & Baojun Jiang, 2018. "Effects of Consumer†to†Consumer Product Sharing on Distribution Channel," Production and Operations Management, Production and Operations Management Society, vol. 27(2), pages 350-367, February.
    20. 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.
    21. Jiawei Chen & Susanna Esteban & Matthew Shum, 2013. "When Do Secondary Markets Harm Firms?," American Economic Review, American Economic Association, vol. 103(7), pages 2911-2934, December.
    22. Nicky J. Welton & Howard H. Z. Thom, 2015. "Value of Information," Medical Decision Making, , vol. 35(5), pages 564-566, July.
    23. Wang, Xiaolei & He, Fang & Yang, Hai & Oliver Gao, H., 2016. "Pricing strategies for a taxi-hailing platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 212-231.
    24. Weihua Liu & Enze Bai & Liwei Liu & Wanying Wei, 2017. "A Framework of Sustainable Service Supply Chain Management: A Literature Review and Research Agenda," Sustainability, MDPI, vol. 9(3), pages 1-25, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Weixiang Huang & Yanzhi Li & Youhua Chen, 2021. "Overage Disutility, User Trading, and Tariff Design," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3758-3783, October.
    2. Choi, Tsan-Ming & Guo, Shu & Liu, Na & Shi, Xiutian, 2020. "Optimal pricing in on-demand-service-platform-operations with hired agents and risk-sensitive customers in the blockchain era," European Journal of Operational Research, Elsevier, vol. 284(3), pages 1031-1042.
    3. Choi, Tsan-Ming & He, Yanyan, 2019. "Peer-to-peer collaborative consumption for fashion products in the sharing economy: Platform operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 49-65.
    4. Pang, Chen & Li, Gang & Jiang, Li, 2023. "Leveraging strategic consumer behavior in consumer-to-consumer resale: From economic and environmental perspectives," Omega, Elsevier, vol. 120(C).
    5. Siqin, Tana & Choi, Tsan-Ming & Chung, Sai-Ho, 2022. "Optimal E-tailing channel structure and service contracting in the platform era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    6. Aditya Vedantam & Emre M. Demirezen & Subodha Kumar, 2021. "Trade‐In or Sell in My P2P Marketplace: A Game Theoretic Analysis of Profit and Environmental Impact," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 3923-3942, November.
    7. Choi, Tsan-Ming & Guo, Shu & Liu, Na & Shi, Xiutian, 2019. "Values of food leftover sharing platforms in the sharing economy," International Journal of Production Economics, Elsevier, vol. 213(C), pages 23-31.
    8. Bian, Yiwen & Cui, Yitong & Yan, Shuai & Han, Xiaohua, 2021. "Optimal strategy of a customer-to-customer sharing platform: Whether to launch its own sharing service?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    9. Sun, Xiaojie & Tang, Wansheng & Chen, Jing & Zhang, Jianxiong, 2020. "Optimal investment strategy of a free-floating sharing platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 138(C).
    10. Meijian Yang & Enjun Xia, 2021. "A Systematic Literature Review on Pricing Strategies in the Sharing Economy," Sustainability, MDPI, vol. 13(17), pages 1-28, August.
    11. Chang Dong & Yong Lei & Qian Liu, 2023. "(Un)conditional collection policies on used products with strategic customers," Production and Operations Management, Production and Operations Management Society, vol. 32(1), pages 82-97, January.
    12. Chang, Xiaoxiao & Zhao, Lindu, 2024. "Collaborative strategies in the product-sharing market considering manufacturer's capital entry," International Journal of Production Economics, Elsevier, vol. 275(C).
    13. Zhenfeng Liu & Jian Feng & Jinfeng Wang, 2019. "Effects of the Sharing Economy on Sequential Innovation Products," Complexity, Hindawi, vol. 2019, pages 1-18, January.
    14. He, Shan & Dai, Ying & Ma, Zu-Jun, 2023. "To offer or not to offer? The optimal value-insured strategy for crowdsourced delivery platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    15. Wang, Yingjia & Fan, Di & Fung, Yi-Ning & Luo, Suyuan, 2022. "Consumer-to-consumer product exchanges for original fashion brands in the sharing economy: Good or bad for fashion knockoffs?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    16. Feng, Yixuan & Tan, Yinliang (Ricky) & Duan, Yongrui & Bai, Yu, 2020. "Strategies analysis of luxury fashion rental platform in sharing economy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 142(C).
    17. Weihua Liu & Shangsong Long & Yanjie Liang & Jinkun Wang & Shuang Wei, 2023. "The influence of leadership and smart level on the strategy choice of the smart logistics platform: a perspective of collaborative innovation participation," Annals of Operations Research, Springer, vol. 324(1), pages 893-935, May.
    18. Huiqi Guan & Xin Geng & Haresh Gurnani, 2023. "Peer‐to‐peer sharing platforms with quality differentiation: Manufacturer's strategic decision under sharing economy," Production and Operations Management, Production and Operations Management Society, vol. 32(2), pages 485-500, February.
    19. Saif Benjaafar & Ming Hu, 2020. "Operations Management in the Age of the Sharing Economy: What Is Old and What Is New?," Manufacturing & Service Operations Management, INFORMS, vol. 22(1), pages 93-101, January.
    20. Shiming Yi & Liying Yu & Ziyuan Zhang, 2020. "Research on Pricing Strategy of Dual-Channel Supply Chain Based on Customer Value and Value-Added Service," Mathematics, MDPI, vol. 9(1), pages 1-19, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:122:y:2019:i:c:p:410-432. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.