Optimal service quality and pricing for App service supply chain with network externality based on four different scenarios
ISSN: 0368-492X
Article publication date: 22 March 2022
Issue publication date: 25 September 2023
Abstract
Purpose
The paper aims to investigate the optimal service quality and pricing for a mobile application (App) service supply chain (SSC) and analyze the impact of network externality on App SSC members' utilities. After that, the corresponding management inspirations and suggestions are put forward.
Design/methodology/approach
The paper developed a SSC consisted of an App service supplier and an App service operator. Our models aim to maximize the SSC members' utilities. By utilizing the game theory, equilibrium solutions are obtained. Numerical examples are used to manifest the impact of parameters on decisions by Matlab. Some management enlightenment could be obtained by comparison analysis.
Findings
Cooperating with an App service operator that asks for a lower revenue sharing ratio will enable the App service supplier to have sufficient funds to provide high-quality update service. With the increase of network externality, adopting a high-quality service strategy can bring higher utility to the App service operator and users. Pouring attention into consumer welfare moderately will improve the App service supplier's utility. Scenario CRS can achieve a win–win goal for App SSC members and consumers.
Originality/value
The innovations of this paper are as follows: Firstly, the authors investigate the optimal service quality and pricing for the App SSC, which has been discussed little in previous literature. Secondly, the authors discuss how network externality and enterprises' attention to consumer welfare affect the optimal decisions and utilities of App service supply chain members. Thirdly, this paper considers four different circumstances and determines the optimal operation scenario for App SSC through comparative analysis.
Keywords
Acknowledgements
This work was financially supported by National Natural Science Foundation of China (Grant NO. 71801118), Scientific Research Fund of Liaoning Provincial Education Department (Grant NO. LQN202024) and Social Science Planning Foundation of Liaoning Province (Grant NO. L21CGL014).
Conflicts of interest: The authors declare that there are no conflicts of interest regarding the publication of this paper.
Citation
Xing, P., Wang, M. and Yao, J. (2023), "Optimal service quality and pricing for App service supply chain with network externality based on four different scenarios", Kybernetes, Vol. 52 No. 9, pp. 3425-3450. https://doi.org/10.1108/K-06-2021-0470
Publisher
:Emerald Publishing Limited
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