Optimizing Investment in Two-Sided Platforms

Platform owners need to manage its internal cash flow as investments on buyer side and on seller side. Investment on buyer side will increase using experiences and investment on seller side can create an atmosphere of innovation. It is much necessary to allocate and optimize the total investment on each side users so as to obtain maximal profit. A three-period game model is developed to find the optimal investment decision. And during the process, we find that platforms can be divided into four kinds as investment non-sensitive platform, Seller-sensitive platform, Buyer-sensitive platform, and Investment sensitive platform. It is also found that the platform system structure influences the distribution of total value on platform owner, buyer side, and seller side.