Optimal freeware quality in the presence of network externalities: an evolutionary game theoretical approach

2001 ◽  
Vol 11 (2) ◽  
pp. 231-248 ◽  
Author(s):  
Ernan Haruvy ◽  
Ashutosh Prasad
Keyword(s):  
Theoretical Approach ◽  
Network Externalities ◽  
Evolutionary Game ◽  
Game Theoretical Approach

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

2021 ◽  
Vol 13 (24) ◽  
pp. 13701
Author(s):  
Gang Liu ◽  
Fengyue An
Keyword(s):  
Theoretical Approach ◽  
Network Externalities ◽  
Value Added ◽  
Pricing Strategies ◽  
Duopoly Model ◽  
Value Added Service ◽  
Game Theoretical Approach ◽  
The Cost ◽  
S Model

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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