Competition between two home‐sharing platforms: Equilibrium strategies for commission contract choice

Abstract In a competitive environment, it is worthwhile focusing on how home‐sharing platforms choose their own commission contracts. This study investigates the equilibrium strategies of two competing platforms choosing commission contracts in a duopoly market, where each platform can adopt the one‐sided‐user commission contract or the two‐sided‐user commission contract. Several key findings are obtained. Under certain conditions, the choice of commission contracts of two platforms can reach Nash equilibrium. In an equilibrium state, two platforms should choose the two different (same) contracts when the network externality intensity is small (large). Particularly, they may fall into the prisoner dilemma when both platforms adopt the one‐sided‐user commission contract. The two platforms can reduce the profit loss caused by the prisoner dilemma by reducing the competition intensity on the supply side. Under certain conditions, the different commission contracts adopted by the two platforms can achieve Pareto improvement for the platforms, customers, and hosts.