Optimal Service Pricing And Revenue Model Decisions For Digital Platforms

A typical digital platform is composed of at least three parties: platform provider(s),content providers,and users.However,the intergrowth nature of platform participators presents great challenges for platform providers' revenue model decisions.Therefore,it is of great theoretical and practical significance to address the optimal service pricing and revenue model decision from the perspective of digital platform economics.Based on the basic theory in information economics,industry economics,marketing,and management science,this dissertation applies the optimization theory and numerical simulation to address the optimal service pricing and revenue model decisions for digital platforms.The dissertation's perspectives include monopolistic platform,duopolistic platforms with full competition,platforms with coopetition,and platform protection under information asymmetry.The detailed contents which are root in different digital platform market structures are as follows:First,this dissertation addresses the optimal pricing and revenue model decision of a monopolistic platform that is characterized by social networking services.The platform provider has three alternative revenue models for consideration: an ad-sponsored model,a subscription-based model,and a hybrid model.Results show that,the adsponsored revenue model is never optimal.When the degree of horizontal differentiation of the premium subscription service is smaller than that of the basic service,the subscription-based revenue model is optimal if the quality of the free service is moderate,the quality advantage of the premium subscription service is relatively low,and the strength of unit misfit cost of the premium subscription service is too low.However,when the degree of horizontal differentiation of the premium subscription service is larger than that of the basic service,the hybrid revenue model is optimal if the strength of unit misfit cost of the premium subscription service is too high and the quality of the premium subscription service is too low.Next,this dissertation addresses the impacts of social effects and service quality on competing platform providers' revenue model decisions.The platform providers adopt either an advertising revenue model or a freemium revenue model.Results show that,the advertising(freemium)model is dominant for each platform provider when its premium service quality is too low(high).Two equilibria in which both platform providers adopt advertising and freemium models coexist,while the former one derives more profits.Then,this dissertation investigates the effects of the platform-performance investment on revenue model decisions for platforms with coopetition.Platforms with hardware and content differentiation may adopt a one-way compatibility strategy.Results show that,when the unit misfit cost of hardware is much less than that of the content,if the royalty rate is too high(low),the agency(resale)revenue model will be adopted by both platform owners.If the royalty rate is neither too high nor too low,the platform owners will adopt different revenue models.When the unit misfit cost of hardware is weakly less than that of the content,the platform owners' revenue model decisions are jointly determined by the relative platform-performance investment efficiency and the royalty rate.Finally,this dissertation analyzes the effects of platform protection and different information structures on equilibrium outcomes for competing two-sided platforms.Results show that,when users are informed,the preferences of the inferior platform vendor and the content providers associated with it depend on both the security effect and the change in user utility from content consumption.However,when users are uninformed,the impact of the security effect diminishes.In addition,mandating information disclosures might be detrimental to customer surplus and social welfare.