The rich get richer: Derivative revenue as a catalyst for bike-sharing subscription services

Abstract

By leveraging the derived revenue from subscription services, our study investigates the feasibility of shared bicycle platforms using pricing strategies for these services to enhance their market competitiveness. We establish that, in scenarios where platforms set prices independently, the derived revenue can effectively counterbalance the potential deficits stemming from service expenditures. In a market dominated by exclusive subscription services, an overemphasis on the locking effects can precipitate a mutually detrimental outcome. In a non-exclusive context, the substantial derived revenue can engender a Matthew Effect. Platforms endowed with elevated availability rates are positioned to perpetuate the expansion of their inherent advantages, progressively eroding the market share of their counterparts with diminished availability rates through strategic encroachment. Additionally, we elucidate the strategic dynamics within a competitive platform landscape, underscoring the imperative for platforms to meticulously evaluate their derived revenue scale and devise strategic choices that resonate with their distinctive advantages.