Platform pricing and blockchain adoption for capacity sharing with cross-network externality and supply risk

Platform-based capacity sharing is a new business format of sharing economy to reallocate spare production resources via industrial internet, generating collaborative manufacturing related platform operations issues. This paper examines the impact of cross-network externality and supply risk of the two-sided market on the pricing and blockchain adopting decisions of capacity sharing platforms. The mean–variance model is employed to depict the impact of purchasers’ or suppliers’ risk-sensitive types on platform pricing, where purchasers’ or suppliers’ risk-sensitive types can be identified by blockchain technology and be intertwined by the cross-network externality. The obtained platform’s optimal pricing under two scenarios with risk-sensitive capacity purchasers (D) and risk-sensitive suppliers (S) shows that the platform charges risk-seeking, risk-neutral and risk-averse users in descending order for the platform side containing risk-sensitive users, regardless of the comparison of bilateral cross-network externalities. However, for risk-neutral side users, the price ranking under three risk-sensitive types depends on the relative size of bilateral cross-network externalities. In addition, blockchain technology always decreases the surplus of risk-sensitive side users, whereas it increases the surplus of risk-insensitive side users. Further, we find that platform prefers to introduce blockchain technology when the fixed cost of introducing it is less than the profit increment it brings. In addition, by comparing platform profits and blockchain value in the two scenarios, we argue that platforms need to comprehensively balance the comparison of fixed costs of introducing blockchain on both sides and the importance of risk-preferring and risk-averse users to improve their profitability. Introducing blockchain technology to the side where the cost of blockchain technology is higher may result in higher blockchain value for the platform. Finally, we examine the platform with two-sided risk-sensitive users and the results are robust. This study proposes theoretical explanation for platform pricing considering the cross-network externality and risk-sensitive users, as well as some management insights for the application of blockchain technology in platform operations.