Regulating the Big Data-Based Discriminatory Pricing in Platform Retailing: A Tripartite Evolutionary Game Theory Analysis

Abstract

Nowadays, with the rapid development of the platform economy, Big Data-based Discriminatory Pricing (BDDP) has become a common phenomenon in which big data and algorithms are applied to excessively seize consumer surplus and thus damage the rights and interests of consumers. This work aims to explore the equilibrium strategies of the consumers, the government, and the service platform and discuss factors affecting the BDDP practice of the service platforms. This study constructs a tripartite evolutionary game model among consumers, service platforms, and the government. Two evolutionary equilibrium strategies are derived and validated using simulation. Numerical experiments are conducted using MATLAB to reveal players’ evolutionary stability strategies under various settings. The study shows that (1) the strategies of the government and the platform always influence each other, (2) a reasonable adjustment of tax rate helps regulate the platform’s behavior, and (3) the proportion of consumers who switch the platform after they realize themselves suffering BDDP is an important factor influencing platform’s strategy. This study lastly summarizes the managerial insights for dealing with the platform’s BDDP behavior and safeguarding consumers’ rights from the perspectives of macro-regulation and privacy data protection. The conclusions of this study can help promote the high-quality development of the platform economy.