Pricing Strategy and Simulation of Forest Rights Exchange Centers Based on the Two-Sided Market Theory

Abstract

There is considerable room to develop an appropriate pricing mechanism for the forest rights transactions in China. In order to solve collective forest rights transactions, this study evaluated the pricing strategy of a forest rights exchange center. Based on the two-sided market theory, the pricing model of a forest rights exchange center was constructed and the price structure that maximizes profit and social welfare was discussed. In addition, the rationality of the theoretical derivation was verified through numerical simulation. The results show that several factors affected the pricing strategy of a forest rights exchange center in a two-sided market, including service level, as well as intragroup externality and cross-network externality. First, according to the different externalities of the cross-network between the two parties, a forest rights exchange center can introduce price preference and subsidy mechanisms to maximize the benefits of the supply and demand. Second, the government should encourage the establishment of trading alliances among village communities to reduce the scale of supply and demand and competition among them. Third, several measures should be made to improve the service level of a forest rights exchange center. Furthermore, it is very important to establish and perfect the two-sided market for forest rights transactions under the current policy conditions. Forest rights exchange centers should formulate differentiated pricing strategies to standardize the management of the forest rights exchange market.