Sharing Economy Platforms’ Pricing Strategies and Decision Preferences: The Example of DiDi

Abstract

The sharing economy model is a new trend in the development of the Internet economy and has been widely applied in transportation industry, showing an increase in its popularity. The proliferation of the sharing economy’s application prompts an investigation of its mechanisms and implications. Using DiDi, a car-sharing company, as an example, and a revenue sharing model built for the study, this paper analyzes the main factors influencing the pricing strategy choices and the decision-making behaviors of sharing economy platforms, then analyzes the factors influencing the risk of resource and customer loss. The following conclusions are drawn: First, when faced with different optimal price choices to ensure revenue maximization for platform only, versus both the platform and the providers, pricing decision of sharing economy platform is related to the sharing costs of providers and the price elasticity of expected transaction volumes. Second, a sharing economy platform tends to choose a low price strategy when the user scale (or number of users) does not exceed the scale threshold (user base), which represents the positive feedback point; otherwise, it involves high price strategies. Third, the decision preferences of a sharing platform will vary according to different marketing stages. The contributions reveal that the price-setting decisions of platform are influenced by sharing costs of providers, user scale and price elasticity.