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Optimal Pricing and Service Investment of Home-Sharing Platforms in a Duopoly Market

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  • Yingna Li
  • Pengfei Ma

Abstract

In this paper, we construct a fully covered duopoly market model. In this market, two home-sharing platforms provide differentiated rental services to consumers, respectively, and each platform has two strategies: short-term rental strategy and long-term rental strategy. This paper studies the pricing decisions and service investment of home-sharing platforms in a competitive market. The results show that, in the market equilibrium, how the platform chooses the strategy largely depends on the service quality of competitors. Specifically, when the difference in service quality is small, it is better for the two platforms to adopt the short-term rental strategy; otherwise, the two platforms are more inclined to adopt the long-term rental strategy. We also find that the commission rate and service cost will also affect the profitability of the platform. Finally, we extend the model to the uncovered market.

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  • Yingna Li & Pengfei Ma, 2021. "Optimal Pricing and Service Investment of Home-Sharing Platforms in a Duopoly Market," Mathematical Problems in Engineering, Hindawi, vol. 2021, pages 1-13, December.
    • Handle: RePEc:hin:jnlmpe:3104478
    DOI: 10.1155/2021/3104478
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