Platform optimal capacity sharing: Willing to pay more does not guarantee a larger capacity share

- We study the capacity sharing policy of a firm that mediates, as a platform, the interactions between two customer groups.
- This paper concerns many sectors such as trade, transport, health, and telecommunications.
- The group with the greatest size does not always obtain the largest capacity share.
- It is not true that the most congestion-sensitive group is always offered the largest capacity share.
- We establish a management rule that allows setting the optimal capacity shares.

In this paper, we study how a mediating business organization or platform allocates a fixed capacity (such as space, infrastructure, or bandwidth) between two distinct but interdependent groups of consumers (sides) that suffer from congestion. The analysis highlights that the platform's capacity sharing management depends not only on the participation levels of both sides but also on the externalities running between them. It is not true that a group's capacity share uniquely depends on its size. Besides, we argue that the platform may not assign the smallest capacity share to the least congestion-sensitive group. Finally, we establish a management rule that a platform's decision maker, e.g. trade fair manager, clinic owner, airport planner, or Internet Service Provider, should adopt when she is confronted with a capacity sharing trade-off between interdependent parties.