Pricing in Two-Sided Markets with Dynamic Subscription Process and Users’ Expectations

This is the authors' abstract. We don't add key points for this paper.

In a dynamic framework, we study pricing strategies in two-sided markets while considering users' expectations. The results show that in the steady-state equilibrium, except for the indirect network effects, the growth rates and users' beliefs may also cause skewed pricing. In non-equilibrium, we find that in the early period, the platform may delay the entrance of users on one side and attract only users on the other side if the costs of attracting a large user base on this side are large. Besides, when the weight coefficients of the conjectured numbers that depend on users' beliefs are high, the optimal price trajectories increase rapidly in the period when the numbers of users are low and then converge to low equilibrium prices.