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| With the dramatic development of e-commerce, digital content consumption has become a major force in consumer market. Compared with traditional products, the value of digital content is perishable and it is easier for platforms to make decisions dynamically in a network environment. The platform adopt dynamic investments to deal with the perishability of platform resources. We develop a dynamic decision model where the platform needs to decide the price of digital content, the advertising level and the platform resources investing level. We use optimal control theory to solve the model and obtain the equilibrium strategies. And we find that when unit advertising benefit is big enough, the platform will open the platform resources for free and increase investing level to attract more consumers, however, even if the unit advertising benefit is excessively large, the platform will not increase the advertising level without limit. |
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| Keywords:digital content platform; optimal control; pricing; advertising; dynamic investment |
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