TITLE:
Video Platforms’ Value-Added Service Investment Strategies for Viewers and Ad Pricing Strategies
AUTHORS:
Fengyue An, Gang Liu
KEYWORDS:
Video Platform, VAS Investment Strategy, Ad Pricing Strategy, Marginal Cost
JOURNAL NAME:
Modern Economy,
Vol.13 No.4,
April
28,
2022
ABSTRACT: This paper develops a duopoly
model in which two free video platforms compete
for two groups of users, i.e., viewers and advertisers. We investigate video
platforms’ value-added service (VAS) investment
strategies and ad pricing strategies under a situation where only one platform
invests in value-added service for viewers. The results reveal that: 1) When
marginal cost increases, the investment platform’s VAS level and ad price first
remain constant and then decrease; the non-investment platform’s ad price first
remains constant and then increases. 2) The impacts of the positive effect of
viewers on the two platforms’ VAS levels and ad prices are related to the
marginal cost. 3) The investment platform’s ad price is higher than the
non-investment platform’s. 4) The investment platform’s ad price is higher in the
situation with investment than in the situation without investment.