We address the impacts of social effects and service quality on business model decisions through a game-theoretic model. These platforms, which integrate social networking services into their services, adopt either an advertising strategy or a freemium strategy. Thus, four strategy combinations that include two strategic substitute cases in which both platforms use either an advertising strategy or a freemium strategy and two strategic complement cases in which the platforms adopt different strategies are possible. We find that the advertising (freemium) strategy is dominant for each platform when its premium service quality is too low (high). Two equilibria in which both platforms adopt advertising and freemium strategies coexist, while the former one derives more profit. Moreover, we study the symmetric platform competition in which platforms use an advertising strategy or a freemium strategy simultaneously. Interestingly, we find if the strength of social effects is medium, the freemium strategy is also dominant when the quality of the premium service is too low. Finally, a win–win outcome that benefits customer surplus and platforms may arise under some conditions under which the basic service quality is too low (high), the premium service quality is too high (low), and a freemium (advertising) strategy is used.

Energy informatics is expected to be significant to improve energy trading efficiency. In this framework, the cooperation among small-scale electricity suppliers and the efficient economic incentives to consumers play important roles to maximize the profits of each small-scale electricity supplier and a single aggregator. The aggregator first collects electricity from the suppliers and/or purchases electricity from the main macrogrid, then sells the electricity to the consumers. A coalitional game model in the presence of direct trading among suppliers is presented and a fair revenue division scheme based on the asymptotic Shapley value is derived. Moreover, an optimal contract-based scheme for electricity trading between the aggregator and consumers is proposed. The scheme enables the aggregator to generate more profits when it is for-profit and preferably supports it to serve all consumers when it is non-for-profit.

Online platforms, such as App Store and Kindle, are facing a common dilemma: while the implementation of technology-based protection impedes piracy and hence boosts demand from legal users (positive effect), the resulting restriction meanwhile imposes some level of disutility on the same due to inconvenience (negative effect). This paper investigates a monopolistic platform’s optimal protection level and pricing strategy under an agency business model (content agency model or advertising agency model). We find that the platform’s protection strategy hinges on the relative magnitude of the two opposing effects of protection. When the negative effect dominates, the minimal protection is optimal. However, as the positive effect becomes more salient, the platform has an incentive to increase the protection level. We also find that although the demand of non-pure platform users always increases as the level of content substitutability rises under the minimal and maximal protection regions, it is not necessarily the case under the medium protection region. The study advances our understanding of the content protection against piracy from a platform’s perspective. Our findings also provide insights into business model decision when platform protection is endogenously determined.

We apply a stylized model to investigate the optimal revenue model for a monopolistic online platform that offers social networking services. There are three possible revenue models: an ad-sponsored model that offers a basic service, a SM that offers a premium service, and a hybrid model of both. We study a scenario in which the unit misfit cost of the premium service is lower than that of the basic service (the easy-to-use premium-service case), and a scenario in which the relationship is inverted (the hard-to-use premium-service case). We find that the ad-sponsored revenue model is always dominated by the hybrid model. When the ratio between the quality of the premium service and that of the basic service is too low (high), the hybrid (subscription-based) model is optimal, regardless of whether the unit misfit cost of a premium service is less or more than that of a basic service. Interestingly, we find that, in the easy-to-use premium-service case, as the unit misfit cost of the premium service increases, the hybrid model is more likely to become the optimal revenue model. However, in the hard-to-use premium-service case, when the unit misfit cost of the premium service is below (above) a threshold, as it increases, the subscription-based (hybrid) revenue model is more likely to become the optimal revenue model.