Pricing strategy of the social commerce under networks externality

The paper investigates the pricing strategy for consumers and the retailers in platform of social commerce such as Facebook. We use the two-sided market theory to model the platform pricing strategy and concluded that the single-homing pricing strategy under asymmetrical externality. Results show that both the same side externality and cross-side externality have a negative effect on the optimal pricing, but the demand elasticity in one side has only a positive effect on the pricing strategy in himself. The same side externality can obtain more consumer welfares. The social commerce is still in infant stage, there are a lot of research opportunities waiting for exploring both in theoretical study and practical applications.