Pricing strategy for C2C sharing platform considering the effect of WOM on purchase decision

Consumers often view online reviews as trustworthy sources of information in Consumer-to-Consumer (C2C) sharing economy, these online reviews create a word-of-mouth (WOM). This paper focuses on four pricing strategies: fixed pricing based on registration fee, dynamic pricing based on registration fee, fixed pricing based on transaction fee and dynamic pricing based on transaction fee, to judge the impact of WOM. Consider a C2C sharing economy market composed of consumers, suppliers, and a platform, construct a game theory model, and obtain the equilibrium solution using backward induction. We find that a moderate WOM always makes the fixed pricing strategy attract more demand. However, the dynamic pricing strategy consistently yields higher profit. Furthermore, if total demand and profit are pursued by the platform at the same time, WOM production makes the dominant strategy shift to fixed pricing strategy based on transaction fee and dynamic pricing strategy based on transaction fee.