Abstract: In the age of the digital economy, cross-market operation is a common way for platform enterprises to expand their business. In the context of cross-market competition, this paper constructs a multi-stage game model in a two-sided market to study the optimal pricing strategy of platform enterprises when a cross-market network effect exists, and analyzes the influences of cross-market network effect and cross network externality on platforms. The findings are as follows. The cross-market platform can always charge positive prices to users on both sides in the new market, but whether they charge or subsidize users in the original market depends on the size of the cross-market network effect. With the increase of the cross-market network effect, the profit in the original market of the cross-market platform decreases, while the profit in the new market and total profit increase accordingly. When the cross-market network effect is large, the profit of the cross-market platform in the original market is negative. Still, the total profit is positive and the total profit is greater than that of its competitors. This paper can provide a new perspective for studying the pricing strategies of platforms.

Key words: platform, cross network externality, cross-market network effect, cross-market competition