Research on Pricing Strategies for Two-sided Platform Business Expansion Considering Asymmetric Network Effects

Under the cross-market network effect characteristics of a platform, this study examines pricing strategies during business expansion by considering asymmetric cross-network effects on both sides of the platform. The findings reveal: (1) When cross-network effects are stronger on the original business's seller (buyer) side, the platform subsidizes the original business's buyer (seller); when cross-network effects are weaker on the original business's seller (buyer) side and cross-market network effects are also weak, the platform charges the original business's buyer (seller). (2) The platform consistently charges sellers in the new business segment. When cross-network effects for buyers in the new business segment are smaller than (larger than) those for sellers, the platform subsidizes (charges) buyers in the new business segment; (3) Profits from the new business segment and the platform's total profits remain consistently positive and are positively correlated with cross-market network effects, whereas profits from the original business segment are negatively correlated with cross-market network effects.