Taxation scheme planning in multi-sided platforms, a case of application platform

Digital transformation plays an increasingly important role in shaping the current business landscape and contributing to economic development. Using digital platforms and various technologies, companies can compete on a global scale with the help of digitization and industry 4.0 technologies. Global firms are benefiting from the rise of the digital economy. Facebook, Alibaba, and Uber compete in a new multi-sided platform world. Businesses such as media companies, banks, and software companies are among the many multi-sided platform firms that serve distinct groups of customers connected by interdependent demand. In this study, we analyze price-setting behavior in a multi-sided platform. As a well-known result of tax incidence by this article, consumers of more heavily taxed goods pay a higher price and buy fewer goods. A multi-sided market does not necessarily hold this result based on our findings. A higher ad valorem tax may actually lower end-user prices and boost sales. Due to this fact, multi-sided platforms may not engage in tax shifting by raising prices. The analysis is followed by a real-life case study of a diet application. The results and discussion are then presented for the proposed real-life case study.