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Conference Paper: Dynamic innovation in a two-sided platform

TitleDynamic innovation in a two-sided platform
Authors
KeywordsComputation methods
Consumer demands
Consumer welfares
High quality
Innovation rate
Price competition
Pricing strategy
Two-sided markets
Two-sided platforms
Issue Date2011
PublisherIEEE, Computer Society. The Journal's web site is located at http://csdl2.computer.org/persagen/DLPublication.jsp?pubtype=p&acronym=HICSS
Citation
The 44th Hawaii International Conference on System Sciences (HICSS-44) Koloa, Kauai, HI., 4-7 January 2011. In Annual Hawaii International Conference on System Sciences Proceedings, 2011, p. 1-9 How to Cite?
AbstractWe are interested in a two-sided platform, in which dynamic innovation plays a role in stimulating consumer demand that also drives firms' incentive to innovate. By explicitly modeling the price competition within the two-sided market, we study ways consumers' platform fee interacts with firms' pricing strategies on the platform. Our framework also characterizes a dynamic R&D race and solves the stationary Markov equilibrium using computation methods. We nd that by charging consumers a fee, the platform is not necessarily better off, because firms may subsidize this cost by lowering their prices in the market, which leads to lower transaction revenues and innovation rate. Platform's revenues may also suffer if it shares firms' transaction revenues. Surprisingly, despite the platform fee, consumer welfare improves as a result of lower prices. However, these effects are not monotonic, and shifts in the opposite direction occur when firms switch to different pricing strategies, because consumers' platform fee also mitigates price competition between low- and high-quality firms. © 2011 IEEE.
Persistent Identifierhttp://hdl.handle.net/10722/140763
ISBN
ISSN

 

DC FieldValueLanguage
dc.contributor.authorLin, Men_US
dc.contributor.authorLi, Sen_US
dc.contributor.authorWhinston, Aen_US
dc.date.accessioned2011-09-23T06:18:46Z-
dc.date.available2011-09-23T06:18:46Z-
dc.date.issued2011en_US
dc.identifier.citationThe 44th Hawaii International Conference on System Sciences (HICSS-44) Koloa, Kauai, HI., 4-7 January 2011. In Annual Hawaii International Conference on System Sciences Proceedings, 2011, p. 1-9en_US
dc.identifier.isbn978-076954282-9-
dc.identifier.issn1060-3425-
dc.identifier.urihttp://hdl.handle.net/10722/140763-
dc.description.abstractWe are interested in a two-sided platform, in which dynamic innovation plays a role in stimulating consumer demand that also drives firms' incentive to innovate. By explicitly modeling the price competition within the two-sided market, we study ways consumers' platform fee interacts with firms' pricing strategies on the platform. Our framework also characterizes a dynamic R&D race and solves the stationary Markov equilibrium using computation methods. We nd that by charging consumers a fee, the platform is not necessarily better off, because firms may subsidize this cost by lowering their prices in the market, which leads to lower transaction revenues and innovation rate. Platform's revenues may also suffer if it shares firms' transaction revenues. Surprisingly, despite the platform fee, consumer welfare improves as a result of lower prices. However, these effects are not monotonic, and shifts in the opposite direction occur when firms switch to different pricing strategies, because consumers' platform fee also mitigates price competition between low- and high-quality firms. © 2011 IEEE.-
dc.languageengen_US
dc.publisherIEEE, Computer Society. The Journal's web site is located at http://csdl2.computer.org/persagen/DLPublication.jsp?pubtype=p&acronym=HICSS-
dc.relation.ispartofAnnual Hawaii International Conference on System Sciences Proceedingsen_US
dc.rightsAnnual Hawaii International Conference on System Sciences Proceedings. Copyright © IEEE, Computer Society.-
dc.rights©2011 IEEE. Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectComputation methods-
dc.subjectConsumer demands-
dc.subjectConsumer welfares-
dc.subjectHigh quality-
dc.subjectInnovation rate-
dc.subjectPrice competition-
dc.subjectPricing strategy-
dc.subjectTwo-sided markets-
dc.subjectTwo-sided platforms-
dc.titleDynamic innovation in a two-sided platformen_US
dc.typeConference_Paperen_US
dc.identifier.emailLin, M: linm@hku.hken_US
dc.identifier.authorityLin, M=rp01075en_US
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.1109/HICSS.2011.173-
dc.identifier.scopuseid_2-s2.0-79952940500-
dc.identifier.hkuros192265en_US
dc.identifier.spage1-
dc.identifier.epage9-
dc.publisher.placeUnited States-
dc.customcontrol.immutablesml 140425-

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