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Optimal pricing and choice of platform advertising schemes considering across‐side network effect

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  • Yongyi Zhou
  • Yulin Zhang
  • M.I.M. Wahab

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.

Suggested Citation

  • Yongyi Zhou & Yulin Zhang & M.I.M. Wahab, 2022. "Optimal pricing and choice of platform advertising schemes considering across‐side network effect," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 1059-1079, June.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:4:p:1059-1079
    DOI: 10.1002/mde.3438
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