Pricing Policy Selection in a Platform Service Supply Chain with Online Reviews

Abstract

In the operation of service-sharing platforms, online review information is crucial to attracting consumers. Considering consumers’ preference for online review information, this paper discusses the pricing policy selection for a service-sharing platform providing vertically differentiated services in sharing economy, which is worth studying. In this paper, a platform service supply chain composed of a high-quality service provider, a low-quality service provider, and a service-sharing platform is considered. For the two pricing policies of a platform: service provider pricing and platform pricing, the profit-maximizing models are constructed, and the optimal high-quality and the low-quality service prices are obtained. This paper also analyzes the effects of online review information on the profits of service providers, platform profits, consumer surplus, and social welfare under the two policies. The results show that under the platform pricing policy, the platform can gain more profits, while the surplus of consumers and service providers may decrease. When the online review information exceeds a threshold, the high-quality service provider profit under the service provider pricing policy is larger than that under the platform pricing policy. Under the platform pricing policy, the low-quality service provider can earn more profit. We also find that the low-quality service provider is more motivated to encourage consumers to provide online reviews regardless of the pricing policy.