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Reconstruction of Intertemporal Pricing Competition in Two-sided Markets Based on Fairness Concerns
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DOI：10.1016/j.ijpe.2026.110183.png)
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Abstract
En 中文
Digital subscription platforms such as Netflix and iQiyi frequently employ dynamic pricing, and users naturally perceive fairness concerns in response to such price changes. These fairness concerns significantly influence the equilibrium pricing structures of two-sided subscription platforms. This paper develops a two-period dynamic pricing game model to study how buyers’ fairness concerns alter the platforms’ pricing structure across buyers and sellers. We show that fairness concerns demonstrate flexibility in adjusting pricing strategies in the intertemporal game of two-sided markets. Different from previous studies, the side with stronger network effects will be subsidized rather than subject to more aggressive pricing decisions when fairness concerns are low. Furthermore, the platform’s pricing strategy is jointly determined by retention rates and fairness concerns. Specifically, for buyers, the platforms adopt the ‘penetration-harvesting’ strategy when both the retention rate and fairness concerns are weak. However, if the retention rate is high, the ‘lock-in effect’ will be utilized to increase the price. For sellers, the platforms adopt an incremental pricing mechanism. We also find that the buyers’ fairness concerns can lead to asymmetric pricing adoption, which alters the traditional seesaw effect (where price increases on one side correspond to decreases on the other). Additionally, the unit transportation cost of two-sided users and fairness concerns jointly determine the strategy selection of the platforms. Essentially, in two-sided markets with strong network externalities, moderate fairness concerns can enhance social welfare.
Keywords:
Two-sided markets
platform operations
fairness concerns
network effect
intertemporal pricing
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