Value-added services decisions of bilateral platform with user expectation and resources constraint

This paper studies the value-added services (VAS) investment and pricing strategies of monopoly bilateral platform with limited resources and asymmetric user information. By constructing a game theory model, we conclude that the platform earns higher profits when both of the bilateral users are informed than when the sellers are informed and the buyers are uninformed. The passive expectation of uninformed users weakens the monopoly power of platform pricing and causes lower platform profit. Additionally, the VAS investment and pricing strategies of the platform are jointly influenced by users' cross-network externality and marginal utility. Among them, the platform investment is mainly related to marginal utility, and its pricing strategies depend heavily on the cross-network externality. Moreover,Uninformed users with passive expectation enforce the platform to invest all of the resources and higher service level in them when the cross-network externality of users on either side does not have a decisive advantage.

Automated summary

This paper investigates the investment and pricing strategies of value-added services (VAS) on a monopoly bilateral platform with limited resources and asymmetric user information. By using a game theory model, the study finds that the platform earns higher profits when both users are informed, and the passive expectation of uninformed users weakens the pricing monopoly power of the platform.