Optimal pricing model of car-sharing: market pricing or platform pricing
Industrial Management & Data Systems
ISSN: 0263-5577
Article publication date: 1 February 2021
Issue publication date: 2 March 2021
Abstract
Purpose
The car-sharing market has entered the mature stage, and consumers' demand shows a diversified increasing trend. This paper considers two modes of operation and two pricing strategies, which are business-to-consumer and consumer-to-consumer modes, market pricing and platform pricing. Under these conditions, the platform's revenue-sharing ratio will be different. The purpose of this paper is to explore this research question, and seeks an optimal pricing mechanism that can achieve a win–win situation between platform and automobile manufacturer in the two market modes.
Design/methodology/approach
The authors design different profit functions for platform under the two contexts. Of course, the platform's function is constrained to the manufacturer's function. By introducing a revenue-sharing contract a Stackelberg game model dominated by the platform is established and the equilibrium solutions under the two pricing models are derived.
Findings
The study found that even if only market pricing is executed, the scale of the car-sharing market will continue to expand. As the car-sharing market becomes more saturated, platform pricing is better for the automobile manufacturer; in most cases, the platform prefers platform pricing, but when the number of private cars is relatively small, if the cost of car operation and maintenance for the automobile manufacturer is lower or the revenue-sharing ratio of private cars is high, then market pricing will be more favorable to the platform.
Practical implications
With the cross-border integration of car service platforms and the automobile manufacturing industry, the key to achieving win–win cooperation and sustainable development in the car-sharing market will converge on the question of how to design a suitable pricing mechanism and revenue-sharing method.
Originality/value
Authors have determined how a car-sharing platform achieves a win–win order pricing strategy with the manufacturer and private car owners, respectively. And authors combined the supply chain revenue-sharing contract with the car-sharing market to explore the application of the revenue-sharing contract in the sharing economy.
Keywords
Acknowledgements
This work is supported by the China Postdoctoral Science Foundation (Grant No. 2018M641947); the Key Program of National Social Science Foundation of China (Grant No. 20AJY008) and the National Science Foundation for Outstanding Young of China (Grant No. 71922008). The authors contributed equally to the paper and author names are in alphabetical order. The authors would also like to express appreciation to the anonymous reviewers and editors for their very helpful comments that improved the paper.
Citation
Liang, L., Tian, L., Xie, J., Xu, J. and Zhang, W. (2021), "Optimal pricing model of car-sharing: market pricing or platform pricing", Industrial Management & Data Systems, Vol. 121 No. 3, pp. 594-612. https://doi.org/10.1108/IMDS-04-2020-0230
Publisher
:Emerald Publishing Limited
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