Platform Performance Based On The Network Externality
Jinjiang Yan, JianKai Xing, Chunxiang Guo, Kai Zhu · Journal of the Association for Information Systems · 2016
An increasing number of markets today are organized around platforms that enable consumers to access and/or purchase various goods and services. Considering the presence of network externality, we study the precondition in which whether the buyer will join the platform. Moreover, this paper investigates the performances of platform in the supply chain in which the leadership belongs to the retailor. We find the optimal decision-making strategies, and the sellers will join the online platform when the network externality is large enough. In addition, the retailer’s optimal profit and demand on offline platform will increase with the rising of network externality, whereas their demand on online platform will decrease, and the manufacturer’s optimal profit and demand on online platform will increase.