Homing strategies for asymmetric sellers on differentiated platforms

Abstract

With the flourishing development of e-marketplace platforms, sellers’ homing strategies have attracted considerable attention and require careful evaluation of the market environment, especially considering platform competition. This study explores two asymmetric sellers' homing and pricing strategies on two asymmetric platforms. The platforms and sellers are differentiated in their credits and boast varied consumers’ willingness to pay. We identify the competition-mitigating effects of utilizing an inferior platform and adopting single-homing strategies. We indicate that such effects should be carefully considered in balance with the valuation-enhancing effect of choosing a superior platform and the market-expanding effect of adopting multi-homing strategy. Moreover, in some situations, the benefits of seller prioritization of platform occupancy and implementation of an “either-or” policy (i.e., mandatory single-homing policy for sellers) can be less than expected. These results enhance our understanding of homing strategy optimization in the face of competition between sellers and platforms.