Abstract:

With the development of the new generation of information technology， the third-party manufacturing platforms are booming. Such platforms are typical two-sided markets， and cross-network effects （CNEs） exist between their bilateral users. That is， one side users’ market scale will affect the willingness of the other side users to access platforms. Specifically， only if there are a certain number of manufacturers on platforms， suppliers will be willing to access， and vice versa. Therefore， the third-party platforms usually need to ensure the participation of one side users first， and then attract the other side users. In practice， the third-party manufacturing platforms can attract manufacturers or suppliers to access first. Affected by the CNEs of manufacturers and suppliers， different introduction strategies of the third-party platforms will bring a differentiated access volume of users， which affects the development and profitability of the platforms. Consequently， the third-party platforms need to strategically introduce their bilateral users. Meanwhile， to expand the scale of users， many platforms pay attention to value-added service （VAS） investment. Due to the existence of CNEs， providing VAS for the users on one side will affect the access volume of bilateral users simultaneously， which complicates the platform’s user introduction and related VAS and pricing decisions.The main work of our paper includes the following four parts. First， considering CNEs affecting the utility of users accessing the platform， the platform’s user introduction strategies are analyzed by developing a game model under different user access sequences. Second， under optimal user introduction decisions， the bilateral VAS and pricing strategies of the platform are studied， and the impacts of VAS investment on pricing strategies and the value of VAS are explored. Finally， through numerical examples， the main conclusions are verified， and some new insights are obtained.The main results of our paper are as follows.It is found when the manufacturers’ CNE strength is strong， the platform should always introduce manufacturers first. However， when the manufacturers’ CNE strength is weak， the platform can introduce manufacturers or suppliers first. In particular， the platform will benefit more from introducing suppliers first if its marginal investing cost to suppliers is high and that to manufacturers is low. No matter what user introduction strategy is formulated， under certain conditions， the platform should offer a high level of VAS to the users who access first but charge them a low fee， while a low level of VAS to the users who access later but charge them a high fee. Moreover， VAS investment of the platform brings a different impact on its pricing for bilateral users. For the users who access later， the platform should charge them more after providing VAS. However， for the users who access first， the platform may charge them less when it offers VAS.

Key words: the third-party platform, cross-network effects, user introduction, value-added service