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Unobserved preferences and dynamic platform pricing under positive network externality
- Source :
- NETNOMICS: Economic Research and Electronic Networking. 21:37-58
- Publication Year :
- 2020
- Publisher :
- Springer Science and Business Media LLC, 2020.
-
Abstract
- We study the dynamic optimization of platform pricing in industries with positive direct network externalities. The utility of the network for the consumer is modeled as a function of three components. Platform price and participation rate affect the consumer’s decision to join the platform. The platform operator is assumed to know the consumer’s sensitivities with respect to these components. In addition, the consumer’s utility is a function of other attributes, such as network privacy policies and environmental effects of the service. We assume that the distribution of these unobserved preferences in the potential customer base is known to the platform operator. We show analytically how the unobserved preferences affect the dynamic platform price design. Both static and rational expectations with respect to the platform participation are presented. We simulate an electricity market demand side management service application and show that the platform operator sets low prices in the launch phase. The platform operator can set higher launching prices if it can affect customers’ preferences, expectations or adjustment friction.
- Subjects :
- lanseeraus
Computer science
environmental effects
consumer behaviour
02 engineering and technology
Network externality
Operator (computer programming)
Customer base
environmental policy
dynamic pricing
pricing
0202 electrical engineering, electronic engineering, information engineering
Electricity market
050207 economics
sähkömarkkinat
Function (engineering)
media_common
palvelut
alustatalous
Rational expectations
demand side management
launching (marketing)
05 social sciences
network externality
customer orientation
kuluttajakäyttäytyminen
corporate strategies
markkinointi
ympäristövaikutukset
Dynamic pricing
kuluttajat
Network effect
Externality
Information Systems
Economics and Econometrics
Computer Networks and Communications
020209 energy
media_common.quotation_subject
hinnoittelu
Demand side management
privacy
consumers
Microeconomics
asiakkaat
energiamarkkinat
0502 economics and business
Unobserved preferences
Service (business)
customers
unobserved preferences
Service (economics)
marketing
consumer prices
electricity market
hinnat
dynaamisuus
prices
Subjects
Details
- ISSN :
- 15737071 and 13859587
- Volume :
- 21
- Database :
- OpenAIRE
- Journal :
- NETNOMICS: Economic Research and Electronic Networking
- Accession number :
- edsair.doi.dedup.....ff11d4b983fbee8f644439c39c8bce98