Abstract:
In contrast to traditional firms, platform firms expand primarily by extending market boarders to attract different types of users. This expansion strategy is affected by the platform’s market power and the affiliation status of their users. This paper studies the influence of platform’s expansion on its pricing strategy in the case of monopoly platform and oligopoly platform. We found that when the platform extends market boarders, the increment in the user scale by the cross-network effect will make the monopolistic platform tend to maintain the price of its original users. Oligopoly platforms, whether the user is single-homed or multi-homed, can attract a larger scale of user group brought by the cross-network effect, although the price of platforms with extended market boarder is higher than that of platforms without extended market boarder.