Research On Quality Improvement Incentive Contract And Competitive Strategy Of "Hardware-Software" Platform

Product platformization has become a typical feature of product competition in the era of mobile Internet.Hardware is the necessary carrier of software platform,while software platform is the basis of hardware function extension.Therefore,some enterprises adopt various methods to integrate the hardware and the software platform,forming the "hardware-software" platform and realizing the platformization of hardware products."Hardware-software" platform is not only the intermediary between application software developers and users,but also the retailer of hardware products(including system software).Additionally,hardware products and application software also form a direct complementary relationship,which is a significant feature of "hardware-software" platform that is different from general software platform.At the same time,in order to comply with the development of the times and meet the needs of consumers,improving the quality of hardware and software is an important strategy.Therefore,it is the great practical significance to study how the complementary relationship between hardware and software in the "hardware-software" platform impacts product quality.In addition,under the complementary relationship,the selection of hardware quality improvement strategy and vertical structure based on competitive "hardware-software" platforms is not only affected by competitive factors,but also affected by software factors.In this dissertation,we build a “hardware-software” platform benchmark model in which the platform provides hardware for consumers,and its one side is the complementary software provider,and the other side is customers.And we use game theory to investigate the influence of this complementary relationship on product quality decision,and study the incentive contract for quality improving “hardware-software” platform.In addition,we further expand to platform competition and respectively dicuss the strategy of platform hardware quality improvement and the strategy of platform vertical structure selection under the hardware quality improvement.First,we study the of the platform,hardware and software,and examine the impact of the network effect,hardware(software)price sensitive coefficient,hardware(software)quality improvement efficiency on hardware(software)quality,the price of hardware and software,the platform and software developers’ profits under the hardware or software quality improvement case.Based on the equilibrium result of in a centralized structure,the incentive contract between the platform and application software developer in a decentralized structure is studied.The Result shows that the hardware sometimes is sold at a loss in “hardware-software” platform.At the same time,stronger complementarity software is beneficial to the improvement of hardware(software)quality,but does not result in the increase of hardware price.And under hardware(software)quality improvement case,software outsourcing contract can coordinate the "hardware-software" two-sided market.We also add the component supplier in the benchmark model,and consider that the component quality improvement directly affects the quality of the hardware.And the result is similar with aboves.But the quantity discount contract and cost sharing contract cannot coordinate this two-sided system including one component supplier,one platform and one software developer.However,the portfolio contracts composed by quantity discount contract,cost sharing contract and software outsourcing contract can coordinate this system.Then,in the case of "hardware-software" platform competition,we explore the dominant hardware quality improvement strategy of the platform,reveal the influence of the platform’s dominant strategy on software developer,and analyse the measures to improve the profit of the platform and software developer under the dominant strategy.The result shows that under certain conditions,the platform can still sell the hardware at a loss,no matter whether the platform improves the hardware quality or not.Improving hardware quality does not always help the platform gain the competitive advantage.Only when the software price sensitivity coefficient is within a certain range and the competition intensity of the platform is less than the threshold or the software price sensitivity coefficient is large enough,both two platforms improving hardware quality is not only the dominant equilibrium strategy but also realize the profit improvement of the software provider.Under the dominant strategy,the platform should continue to carry out hardware product innovation,and the platform should give up introducing software under some certain conditions.Finally,under the case of two quality improving platforms competing for vertical structure,we analyse the influence of competitive intensity on hardware and software prices and hardware quality improvement level based on three competitive types,and explore the dominant vertical structure platform strategy,reveal the impact of the dominant vertical structure on hardware and software sales,and the improvement level of hardware quality.The result shows that when the competitor adopts the vertical integration structure,the hardware must not be sold at a loss in the vertical separated platform.The improvement level of hardware quality is not only related to the competitive intensity but also related to the importance of software.And the equilibrium strategy of the competitive platforms is both of them adopting vertical integration structure,but this strategy may be the prisoner’s dilemma equilibrium.No matter what the vertical structure the competitor adopts,vertical integration strategy always guarantee the improvement level of hardware quality and sales of hardware and software higher.In summary,this dissertation mainly has three innovative contributions as follows:(1)we build the "hardware-software" two-sided market model,and reveal the influence mechanism of complementary effects on the operational decisions of the platform and application software developers on the basis of depicting the complementary degree between hardware and application software;(2)we design the incentive contracts in the "hardware-software" platform game benchmark model with considering the quality improvement of hardware,software and parts respectively;(3)we study the optimal hardware quality improvement strategy on the condition that platform competition;(4)we study the vertical structure selection strategy of "hardware-software" platform with hardware quality improvement when it has competitors and reveal that the platform always has the motivation to adopt the vertical integration structure.