Platform competition with partial multi-homing: When both same-side and cross-side network effects exist

Xie, Jiaping; Zhu, Weijun; Wei, Lihong; Liang, Ling

doi:10.1016/j.ijpe.2020.108016

Cited by 31 publications

(19 citation statements)

References 23 publications

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“…With the development of big data and new information technology, various types of digital platforms have emerged in recent years, such as online sales platforms, short video platforms, sharing platforms, and freelance platforms [ 6 , 7 ]. More and more scholars have begun to pay attention to the issue of platform operation and management [ 8 – 11 ]. Similar to other online platforms, e-commerce platforms attract merchants and consumers to join them for online transactions, and the platform charges merchants or consumers a commission to obtain profits [ 12 ].…”

Section: Literature Reviewmentioning

confidence: 99%

The role of data-driven services strategy in platform competition: A system performance perspective

Xie²,

Zhang³

2023

PLoS ONE

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In the era of big data, data-driven services (DDS) have become critical competitive strategies for digital platform-based enterprises. This paper considers two operational modes of e-commerce platforms, which are self-operated and third-party modes, respectively, and they each lead a platform system. The Hotelling model is adopted to describe the competitive market of both platforms. We characterize their system performance functions. The optimization models are built using game theory to discuss the DDS and price decisions. We obtain the implementation conditions of DDS strategies for both platforms and the dominant situations of their respective DDS levels. We find that a platform adopting the price reduction strategy can improve the performance of its platform system while reducing the competitor’s system performance. From the system performance perspective, continuous improvement of the DDS level may appear “harming others may not benefit oneself”; that is, continuously improving the DDS level leads to a decrease in the competitor’s system performance but not necessarily an increase in its system performance. Further, consumer welfare within both platform systems shows the law of “as one falls then another rises”. As the big data industry matures, self-operated platforms would demonstrate the advantages of service level, profit, and system performance. In contrast, third-party platforms would have an advantage in consumer welfare. These conclusions have important implications for e-commerce platforms developing data-driven operations-based strategies.

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Section: Literature Reviewmentioning

confidence: 99%

The role of data-driven services strategy in platform competition: A system performance perspective

Xie²,

Zhang³

2023

PLoS ONE

Self Cite

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“…Carroni and Paolini studied price discrimination of content versioning in the presence of content providers and analyzed the impact of content diversity and different negative cross-network externalities on pricing [21]. Xie et al studied the pricing strategy of multihoming and analyzed the influence of cross-network externalities on pricing [22].…”

Section: Literature Reviewmentioning

confidence: 99%

“…In addition, we do not consider the production cost of platform programs. ere are two reasons: Firstly, this paper referred to the relevant literature on the pricing and business models of online media platforms, such as references [22,24]. is paper analyzed the revenue sources and revenue structures of video platforms from the perspectives of membership revenue and advertising revenue.…”

Section: The Model and Assumptionsmentioning

confidence: 99%

“…At this time, the procurement cost is usually set as a copyright fee model related to video quality or a fixed fee model, and these two content cost functions do not affect the profit model and revenue structure of the video platform in this paper, so this paper assumes that the content cost of the video platform is not considered. erefore, referring to the literature [22,24], in order to highlight the research focus, the production cost of platform program is 0. us, the profit function of video platform i is as follows:…”

Section: The Model and Assumptionsmentioning

confidence: 99%

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Research on the Revenue Management of Network Video Platform Based on Game Theory

2022

Mathematical Problems in Engineering

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To study how the network video platform can improve revenue and optimize the revenue structure, we construct an asymmetric competition model between free and paid platforms based on game theory, and the impact of the positive and negative cross-network externalities and program differentiation on platform’s competition and revenue are analyzed. The results show that changes in the relative relationship of positive and negative cross-network externalities may lead to free platform exiting the consumer market or paid platform exiting the advertising market. Only when the ratio of positive and negative cross-network externalities is moderate, the free and paid platform coexist, and the greater the difference of program, the greater the possibility of coexistence. With the effect of the positive and negative cross-networks externalities, the multi-revenue structure of the payment mode is not always better than the single revenue structure of the free platform. In addition, the impact of the positive and negative cross-network externalities and program differentiation on the revenue of free and paid platforms are nonlinear. If the platform wants to achieve greater revenue through the adjustment of revenue structure, it should fully consider the relative relationship of positive and negative cross-network externalities and program differentiation, otherwise it may bring losses.

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“…The growth of various platforms has been accelerating globally in recent years due to the growth of Internet technology and its widespread application in the digital age [1][2][3][4]. Media platforms, such as online video platforms [5], have experienced a dramatic boom [6,7] with the emergence of many large video platforms (e.g., IQiyi, YouTube, Bing videos and Dailymotion).…”

Section: Introductionmentioning

confidence: 99%

Video Platforms’ Value-Added Service Investments and Pricing Strategies for Advertisers

Liu

2021

Sustainability

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Using a game-theoretical approach, this paper develops a duopoly model and examines value-added service (VAS) investments and pricing strategies on video platforms with opposite inter-group network externalities between two groups. We consider two scenarios with VAS investment, namely, a single platform investing in VASs for advertisers (S-Model) and both platforms investing in VASs for advertisers (B-Model). We found the following: (i) In the S-Model, the investing platform’s VAS level remains maximum when the marginal investing cost is low; otherwise, it decreases with the cost. Investing and non-investing platforms’ advertising prices are unaffected by the marginal investing cost if the cost is low; otherwise, the prices decrease and increase with the cost, respectively. Furthermore, the investing platform’s advertising price is higher than the non-investing platform’s. (ii) In the B-Model, the two platforms’ VAS levels remain maximum if the marginal investing cost is low; otherwise, they decrease with the cost. The two platforms’ advertising prices are equal and irrelevant to the marginal investing cost. (iii) The investing platform’s VAS level in the S-Model is higher than or the same as that in the B-Model and the investing platform’s advertising price in the S-Model is higher than that in the B-Model. (iv) Compared to the scenario without VAS investment, the investing platform’s advertising price is higher in the S-Model, but the same in the B-Model.

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Platform competition with partial multi-homing: When both same-side and cross-side network effects exist

Cited by 31 publications

References 23 publications

The role of data-driven services strategy in platform competition: A system performance perspective

The role of data-driven services strategy in platform competition: A system performance perspective

Research on the Revenue Management of Network Video Platform Based on Game Theory

Video Platforms’ Value-Added Service Investments and Pricing Strategies for Advertisers

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