Optimal Pricing and Advertising of Competitive Platforms in Local Market with Mobile Service Providers
How an incumbent platform responds to the advertisement of an entrant platform in a market of mobile service providers is examined.It is found that:(1)If the entrant platform offers high-intensity advertis-ing,the incumbent platform will give a higher wage on the service provider side to response the entrant.When the local market is relatively large,the entrant platform will capture market share,but its profit always is nega-tive.(2)If the entrant platform has low-intensity advertising,the incumbent platform will not respond to the entrant,that is,the incumbent will continue to charge monopoly price and offer monopoly wage.Additionally,more mobile service providers who enter the local market also reduce the incumbent platform's motivation to response the entrant.In such a case,the market share and profit of the entrant may be higher than the incumbent.(3)When the entrant platform has full-coverage advertising,the platform's choice to respond or not depends on the switching costs of the service provider and the buyer.
incumbent platformentrant platformadvertisinglocal marketmobile service provider
万方数据
维普
