Hotelling Model Based Dynamic Pricing of Three Sides

In this paper, we introduce the third firm into the original market, and continue to analyze the pricing game of three and the equilibrium of dynamic pricing that three firms achieve. We choose to set the case into a pricing game in the expanding Hotelling model. Through the analysis and comparison, we conclude that firms which implement dynamic pricing based on price discrimination will be better off than those not. In addition, we can reach a crucial conclusion that the firm which embraces a strong power of monopoly advantage and charges a higher price in the duopoly market is sure to make more profits through dynamic pricing based on price discrimination no matter in duopoly market or where added the third side, while other firms will make less profit in the pricing game undoubtedly.