TITLE:
Sharing Economy Platforms’ Pricing Strategies and Decision Preferences: The Example of DiDi
AUTHORS:
Yanli Guo, Jianbin Chen, Yingying Zhou, Jie Geng
KEYWORDS:
Sharing Economy, Pricing Strategies, Revenue Maximization, Price Elasticity
JOURNAL NAME:
Open Journal of Business and Management,
Vol.8 No.4,
July
24,
2020
ABSTRACT: The sharing economy model is a new trend in the development of the
Internet economy and has been widely applied in transportation industry,
showing an increase in its popularity. The proliferation of the sharing economy’s
application prompts an investigation of its mechanisms and implications. Using
DiDi, a car-sharing company, as an example, and a revenue sharing model built
for the study, this paper analyzes the
main factors influencing the pricing strategy choices and the decision-making
behaviors of sharing economy platforms, then analyzes the factors influencing
the risk of resource and customer loss. The following conclusions are drawn: First,
when faced with different optimal price choices to ensure revenue maximization
for platform only, versus both the platform and the providers, pricing decision
of sharing economy platform is related to the sharing costs of providers and
the price elasticity of expected transaction volumes. Second, a sharing economy
platform tends to choose a low price strategy when the user scale (or number of
users) does not exceed the scale threshold (user base), which represents the
positive feedback point; otherwise, it involves high price strategies. Third,
the decision preferences of a sharing platform will vary according to different
marketing stages. The contributions reveal that the price-setting decisions of
platform are influenced by sharing costs of providers, user scale and price
elasticity.