Prices of Platforms’ Differentiated Competition under Different Levels of Agents’ Information: Based on the Model of Stackelberg Pricing Game

Abstract

We study the competitive prices of duopoly two-sided platforms with differentiation of crossgroup network externality strengths under two different levels of agents’ information which are informed and uninformed through the Stackelberg pricing games model based on standard Hotelling model and the assumptions that the agents of platform form responsive expectations if they are informed and form passive expectations if they are uninformed. The results include the structures of equilibrium prices, the comparison of equilibrium prices between two platforms and the responses of equilibrium prices to the strengths of crossgroup network externality and horizontal differentiation. We also find that there are significant differences in pricing strategies between not only the two sequential pricing platforms but also the one platform under two different levels of agents’ information through the comparisons among the results.