Platform Strategy Symposium 2017 Discussion Dynamic Platform Competition

Summary of the Study p The development of a successfully platform businesses – the

Dynamic analysis of the network evolution p Settings: – Multi-homing providers – Single-homing customers

Piggybacking strategy p Findings under the dynamic asymmetric duopoly model: – Piggybacking may cause

Summary of Comments p From the baseline (single-period monopoly) model, add – the competition

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Platform Strategy Symposium 2017 Discussion: Dynamic Platform Competition: Optimal Pricing and Piggybacking under Network Effects Yifan Dou and D. J. Wu by Jennifer Jie Zhang University of Texas at Arlington

Two-sided Platform

Summary of the Study p The development of a successfully platform businesses – the chicken-and-egg problem p Piggybacking strategy p The model considers (1) Dynamic analysis of the network evolution – How the platform owner strategically prices the two sides while building the platform over time? (2) Competitive platforms – How to differentiate with the competing platform (3) Many extensions – Three periods model – Asymmetric discounting factors

Dynamic analysis of the network evolution p Settings: – Multi-homing providers – Single-homing customers – Symmetric duopoly p Pricing: compared with a single-period model, – on the customer side: both platforms lower period-1 price, and increase period-2 price – On the provider side: period-1 price remains unchanged, period 2 price change δ(α-β)/8. p Comments: – Equation (2): there is no within-network externality on the provider side (qdki is independent of other providers’ number or pricing) – More results: how’s the growth of the market sizes on both sides of the platform over time? – How do the assumptions affect the subsidizing strategy?

Piggybacking strategy p Findings under the dynamic asymmetric duopoly model: – Piggybacking may cause price wars between the two platforms or benefit both depending on the relative values of α and β p Comments: – Piggybacking strategy normally requires a contractual or affiliation relationship -- related to the cost structure – How does competition affect the piggybacking strategy – compared with the monopolist case

Summary of Comments p From the baseline (single-period monopoly) model, add – the competition between (asymmetric) platforms – Dynamic effect (2 -period, 3 -period) – Nonprice controls: piggybacking p Show the dynamic pricing, platform competition, nonprice controls affect the market size, pricing, profits, interactions between the three players in the market