Optimal pricing and choice of platform advertising schemes considering across‐side network effect. (25th August 2021)

• Record Type: Journal Article
• Authors: Zhou, Yongyi; Zhang, Yulin; Wahab, M.I.M.
• Is Part Of: Managerial and decision economics. Volume 43:Number 4(2022)
• Page Start: 1059
• Page End: 1079
• Publication Date: 2021-08-25
• Subjects: Managerial economics -- Periodicals; Decision making -- Periodicals; Management -- Periodicals; 658.15
• DOI: 10.1002/mde.3438
• Languages: English
• ISSNs: 0143-6570

Abstract

Abstract : This paper examines the choice of advertising schemes for the two‐sided platform considering the across‐side network effect. We present various advertising schemes, derive the equilibrium decisions, and then compare these schemes from the point of view of the platform operator and social planner. Compared to the "TN" scheme, commissions charged from the provider in the "SA" scheme and the "TA" scheme are higher, but the former scheme is beneficial to the provider. Moreover, there exists a threshold value of the across‐side network effect, and hence, the "TA" scheme cannot bring the largest social welfare.