Abstract: The booming Internet economy has promoted the rapid growth of the App sales, and the quality and price of Apps are two important factors in attracting App users. Besides the price competition, App platforms and developers are increasingly focusing on investing in the quality of their Apps. For instance, Google is adding a number of new features to make Android App development easier for developers, which will help the developers build Apps that load fast and can be released instantly. However, platforms also make negative quality investments in Apps sometimes. For example, Apple Store has blocked some features of the Safe Kids App developed by Kaspersky Lab from going online on the ground that it jeopardizes the privacy and security of users. How to optimize App quality investment and pricing decisions to maximize profits for App platforms and developers? We will answer this question in this paper.
Considering one App platform and two App developers, each developer provides one App, and the two Apps are functionally similar but have quality heterogeneity. This paper applies the hotelling model to reflect the horizontal difference between the two Apps, and studies the problem by using game theory. In the game, the following events happen sequentially: (1)Both the platform and two developers make their quality investment decisions on Apps. (2)Each developer makes the pricing decision on his own App. We assume both the platform and two developers are risk-neutral, and they make decisions to maximize their own profits. We first conclude two types of quality investment strategies of the platform: one is to support the weak and suppress the strong, and the other is to support the strong and suppress the weak. For each type of the quality investment strategy of the platform, we then compare the equilibrium decisions and profits of both the platform and developers in three scenarios, and analyze the optimal decision-making choices of the platform and developers. Note that, the three scenarios are: the platform invests in both Apps, the platform only invests in the high-quality App, and the platform only invests in the low-quality App.
The results show that: (1)When the unit quality investment cost of the platform is relatively low, the optimal quality investment strategy of the platform is to support the high-quality App. In this case, the high-quality App developer will improve the quality and increase the price of the App, while the low-quality App developer will reduce the quality and the price of the App. Meanwhile, among the three scenarios, the profit of the high-quality App achieves the maximum, but the profit of the low-quality App reaches the minimum, and a strong-take-all market will be formed. (2)When the unit quality investment cost of the platform is relatively high, the optimal quality investment strategy of the platform is to support the low-quality App and meanwhile suppress the high-quality App. In this case, the low-quality App developer will improve the quality and increase the price of the App, while the high-quality App developer will reduce the quality and the price of the App. Meanwhile, among the three scenarios, the profit of the low-quality App achieves the maximum, but the profit of the high-quality App reaches the minimum, and a market filled with evenly matched competitors will be formed. (3)In general, a platform with a higher unit quality investment cost will choose the quality investment strategy to support the weak and suppress the strong. This strategy is more conducive to the development of the App market, promoting the coordinated development of the strong App and the weak App, and preventing the monopoly of the App market. (4)A large difference in the maturity of the two Apps can lead to an invalidation of the platform quality investment. Therefore, when differences in the maturity of Apps on a platform are small, it is more conducive to improving the quality of Apps and promoting the healthy development of the App market.
The main contributions of this paper are: (1)For two Apps with different maturity levels and quality heterogeneity, we study the optimal quality investment strategy of the platform under different investment costs, and summarize two types of quality investment strategies for the platform, which has not been covered in the existing literature. (2)We find that it is more conducive to the healthy development of the App market to maintain a high unit quality investment cost for the platform, because a high unit quality investment cost will push the platform to choose the strategy of supporting the weak and suppressing the strong, which will lead to forming a market filled with evenly matched competitors.

Key words: platform economy, application, quality heterogeneity, quality investment, pricing

摘要： 互联网经济的蓬勃发展促进了应用程序销售额的快速增长,而应用程序的质量和价格是吸引用户的两大因素。针对一个应用程序平台和两个开发者,每个开发者提供一款应用程序,两款应用程序功能相似但具有质量异质性,研究平台和开发者对应用程序的质量投资决策,以及开发者对应用程序的定价决策,在平台的两类质量投资策略下,分别比较了平台和开发者在不同场景下的均衡决策和利润,分析了平台和开发者的最优决策。研究发现:(1)若单位质量投资成本较低,则平台选择支持强势应用程序,强势应用程序提质增价,弱势应用程序则降质减价,形成强者通吃的局面。(2)若单位质量投资成本较高,则平台选择扶持弱势应用程序且同时打压强势应用程序,弱势应用程序提质增价,强势应用程序则降质减价,形成势均力敌的局面。(3)一个具有较高的单位质量投资成本的平台更有利于应用程序市场的健康发展。(4)若两个应用程序的成熟度差异较大,则会导致平台质量投资的无效化。

关键词: 平台经济, 应用程序, 质量异质性, 质量投资, 定价