IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v11y2023i8p1927-d1127690.html
   My bibliography  Save this article

The Impact of Two-Sided Market Platforms on Participants’ Trading Strategies: An Evolutionary Game Analysis

Author

Listed:
  • Yingxiu Zhao

    (School of Economics, North China University of Science and Technology, Tangshan 063210, China)

  • Sitong Zhou

    (School of Economics, North China University of Science and Technology, Tangshan 063210, China)

Abstract

With the development of internet technology, more two-sided market platforms, e.g., Tabao, Amazon and Lending Club, have emerged, and it is worth exploring the role that these two-sided market platforms can play in better serving users. This paper explores the impacts of platforms on participants’ trading strategies in the two-sided market, taking the online loan market as an example. Based on the management strategies of online lending platforms, we divided them into two categories: active online lending platforms and inactive online lending platforms. Evolutionary game theory and numerical simulation were employed to investigate the influences of these two types of platforms on the trading strategies of lenders and borrowers. We found that active and appropriate management measures taken by active online lending platforms can steer lenders and borrowers towards adopting win-win trading strategies, thus attracting more high-quality borrowers and corresponding investors. These results imply that a platform with two-sided market characteristics plays a crucial role in coordinating and guiding participants on both sides, and active management measures adopted by the platform can promote the benign operation of the two-sided market.

Suggested Citation

  • Yingxiu Zhao & Sitong Zhou, 2023. "The Impact of Two-Sided Market Platforms on Participants’ Trading Strategies: An Evolutionary Game Analysis," Mathematics, MDPI, vol. 11(8), pages 1-18, April.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:8:p:1927-:d:1127690
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/11/8/1927/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/11/8/1927/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yingxiu Zhao & Baojuan Shi & Xiao Li, 2021. "Incentive and Coordination in the Two-Sided Market: Evidence from the P2P Lending Market," Discrete Dynamics in Nature and Society, Hindawi, vol. 2021, pages 1-15, November.
    2. Marc Rysman, 2007. "An Empirical Analysis Of Payment Card Usage," Journal of Industrial Economics, Wiley Blackwell, vol. 55(1), pages 1-36, March.
    3. Daniel Friedman, 1998. "On economic applications of evolutionary game theory," Journal of Evolutionary Economics, Springer, vol. 8(1), pages 15-43.
    4. Zhang, Yan & Wang, Si-Xia & Yao, Jian-Ting & Tong, Rui-Peng, 2023. "The impact of behavior safety management system on coal mine work safety: A system dynamics model of quadripartite evolutionary game," Resources Policy, Elsevier, vol. 82(C).
    5. Liu, He & Qiao, Han & Wang, Shouyang & Li, Yuze, 2019. "Platform Competition in Peer-to-Peer Lending Considering Risk Control Ability," European Journal of Operational Research, Elsevier, vol. 274(1), pages 280-290.
    6. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    7. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    8. Fang Song & Xiwu Hu & Junfeng Li & Michael Allen Watson & Polinpapilinho Katina, 2021. "Altruistic Punishment, Status Conflict, and Knowledge Sharing in the Workplace: An Evolutionary Game Model," Discrete Dynamics in Nature and Society, Hindawi, vol. 2021, pages 1-24, April.
    9. Friedman, Daniel, 1991. "Evolutionary Games in Economics," Econometrica, Econometric Society, vol. 59(3), pages 637-666, May.
    10. Andrei Hagiu & Daniel Spulber, 2013. "First-Party Content and Coordination in Two-Sided Markets," Management Science, INFORMS, vol. 59(4), pages 933-949, April.
    11. Andrei Hagiu, 2006. "Pricing and commitment by two‐sided platforms," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 720-737, September.
    12. Mingfeng Lin & Nagpurnanand R. Prabhala & Siva Viswanathan, 2013. "Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 59(1), pages 17-35, August.
    13. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    14. Juanjuan Zhang & Peng Liu, 2012. "Rational Herding in Microloan Markets," Management Science, INFORMS, vol. 58(5), pages 892-912, May.
    15. Michael Dinerstein & Liran Einav & Jonathan Levin & Neel Sundaresan, 2018. "Consumer Price Search and Platform Design in Internet Commerce," American Economic Review, American Economic Association, vol. 108(7), pages 1820-1859, July.
    16. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    17. Kaiser, Ulrich & Wright, Julian, 2006. "Price structure in two-sided markets: Evidence from the magazine industry," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 1-28, January.
    18. Dawoon Jung & Byung Cho Kim & Myungsub Park & Detmar W. Straub, 2019. "Innovation and Policy Support for Two-Sided Market Platforms: Can Government Policy Makers and Executives Optimize Both Societal Value and Profits?," Information Systems Research, INFORMS, vol. 30(3), pages 1037-1050, September.
    19. Zaiyan Wei & Mingfeng Lin, 2017. "Market Mechanisms in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 63(12), pages 4236-4257, December.
    20. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
    21. Zhao, Yingxiu & Zhang, Wei & Li, Yuelei & Xiong, Xiong, 2021. "Does irrational lead to higher returns? Evidence from the Chinese P2P lending market," Finance Research Letters, Elsevier, vol. 39(C).
    22. Xiaoxi Zhu & Changhui Yang & Kai Liu & Rui Zhang & Qingquan Jiang, 2022. "Cooperation and decision making in a two-sided market motivated by the externality of a third-party social media platform," Annals of Operations Research, Springer, vol. 316(1), pages 117-142, September.
    23. Andrei Hagiu, 2006. "Pricing and Commitment by Two-Sided Platforms," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 720-737, Autumn.
    24. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 483-512.
    25. Imke Reimers & Claire (Chunying) Xie, 2019. "Do Coupons Expand or Cannibalize Revenue? Evidence from an e-Market," Management Science, INFORMS, vol. 65(1), pages 286-300, January.
    26. Bruno Jullien, 2005. "Two-sided Markets and Electronic Intermediaries," CESifo Economic Studies, CESifo Group, vol. 51(2-3), pages 233-260.
    27. Markus Reisinger & Ludwig Ressner & Richard Schmidtke, 2009. "Two‐Sided Markets With Pecuniary And Participation Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 32-57, March.
    28. Wei Liu & Li-Qiu Xia, 2017. "An Evolutionary Behavior Forecasting Model for Online Lenders and Borrowers in Peer-to-Peer Lending," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(01), pages 1-14, February.
    29. Gao, Guang-Xin & Fan, Zhi-Ping & Fang, Xin & Lim, Yun Fong, 2018. "Optimal Stackelberg strategies for financing a supply chain through online peer-to-peer lending," European Journal of Operational Research, Elsevier, vol. 267(2), pages 585-597.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xin Li & Kenan Li & Yongjian Li, 2023. "Platform Operations under Dual-Channel Catering Supply Chain," Mathematics, MDPI, vol. 11(16), pages 1-33, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    2. Wang, Jin, 2021. "Do birds of a feather flock together? Platform’s quality screening and end-users’ choices theory and empirical study of online trading platforms," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    3. Jan Frederic Nerbel & Markus Kreutzer, 2023. "Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-20, December.
    4. Sui, Ronghua & Zhang, Xumei & Dan, Bin & Zhang, Haiyue & Liu, Yi, 2023. "Bilateral value-added service investment in platform competition with cross-side network effects under multihoming," European Journal of Operational Research, Elsevier, vol. 304(3), pages 952-963.
    5. Jacobides, Michael G. & Cennamo, Carmelo & Gawer, Annabelle, 2024. "Externalities and complementarities in platforms and ecosystems: From structural solutions to endogenous failures," Research Policy, Elsevier, vol. 53(1).
    6. Filistrucchi, L. & Gerardin, D. & van Damme, E.E.C. & Keunen, S. & Klein, T.J. & Michielsen, T.O. & Wileur, J., 2010. "Mergers in Two-Sided Markets - A Report to the NMa," Other publications TiSEM f901d1fe-8878-444e-a685-8, Tilburg University, School of Economics and Management.
    7. Marco Antonielli & Lapo Filistrucchi, 2011. "Collusion and the political differentiation of newspapers," Working Papers 11-26, NET Institute, revised Nov 2011.
    8. Burcu Tan & Edward G. Anderson, Jr. & Geoffrey G. Parker, 2020. "Platform Pricing and Investment to Drive Third-Party Value Creation in Two-Sided Networks," Information Systems Research, INFORMS, vol. 31(1), pages 217-239, March.
    9. Carrillo, Juan D. & Tan, Guofu, 2021. "Platform competition with complementary products," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    10. Jingtao Yi & Jinqiu He & Lihong Yang, 2019. "Platform heterogeneity, platform governance and complementors’ product performance: an empirical study of the mobile application industry," Frontiers of Business Research in China, Springer, vol. 13(1), pages 1-20, December.
    11. Liu, He & Li, Xuerong & Wang, Shouyang, 2021. "A bibliometric analysis of 30 years of platform research: Developing the research agenda for platforms, the associated technologies and social impacts," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    12. Subhasish M. Chowdhury & Stephen Martin, 2017. "Exclusivity and exclusion on platform Markets," Journal of Economics, Springer, vol. 120(2), pages 95-118, March.
    13. Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266.
    14. Galeotti, Andrea & Moraga-González, José Luis, 2009. "Platform intermediation in a market for differentiated products," European Economic Review, Elsevier, vol. 53(4), pages 417-428, May.
    15. Belleflamme, Paul & Peitz, Martin & Toulemonde, Eric, 2022. "The tension between market shares and profit under platform competition," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    16. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail, 2021. "Language, internet and platform competition," Journal of International Economics, Elsevier, vol. 131(C).
    17. S. Sriram & Puneet Manchanda & Mercedes Bravo & Junhong Chu & Liye Ma & Minjae Song & Scott Shriver & Upender Subramanian, 2015. "Platforms: a multiplicity of research opportunities," Marketing Letters, Springer, vol. 26(2), pages 141-152, June.
    18. Lapo Filistrucchi & Damien Geradin & Eric van Damme, 2012. "Identifying Two-Sided Markets," Working Papers - Economics wp2012_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    19. Liu, He & Qiao, Han & Wang, Shouyang & Li, Yuze, 2019. "Platform Competition in Peer-to-Peer Lending Considering Risk Control Ability," European Journal of Operational Research, Elsevier, vol. 274(1), pages 280-290.
    20. Muxin Li, 2023. "Do Lower Search Costs Benefit Intermediaries?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(3), pages 373-405, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:11:y:2023:i:8:p:1927-:d:1127690. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.