Author:
Guofang Nan
Chenyu Chu
Zhiyong Li*
Minqiang Li
Abstract:
This study analyzes the revenue-model decision of social platforms with a commerce feature. The social platforms can adopt either an advertising model or a brokerage model. We first address the social platform’s optimal pricing strategies under a given revenue model and then present the condition under which each revenue model is optimal. We find that, when the fixed fee is very low (high), the advertising (brokerage) model is always optimal for the social platform. When the fixed fee is medium, the advertising model is optimal for the social platform if the disutility of advertisements is very low; otherwise, the brokerage model is optimal. Interestingly, we find that the condition under which each revenue model is optimal also enables the social platform to be allocated more profits from the supply chain. This study enriches the theoretical foundation on the revenue model decision of the social platform which connects three (when the brokerage model is adopted) or four (when the advertising model is adopted) different groups of agents. Our findings provide insights into the revenue-model decision of a social platform with commerce.
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Published Date:
May, 2021