Decisions of Knowledge Payment Product Supply Chain Considering Government Subsidies and Anti-Piracy Efforts: Based on China’s Knowledge Payment Market

Abstract

Knowledge payment is an emerging business mode that has developed in the era of social media. With the impact of Internet technology, the knowledge payment market is rapidly expanding, especially in China. However, piracy leads to more intense competition and affects the profits of knowledge providers and knowledge payment platforms. Government policies combined with the anti-piracy measures of these platforms have become effective methods to combat piracy. This paper investigates the impact of government subsidies and anti-piracy efforts on a knowledge provider’s and platform’s optimal decisions. We develop a two-stage knowledge payment product supply chain with a knowledge provider and a knowledge payment platform. The platform in the leader position of the supply chain has anti-piracy efforts and the government subsidizes the platform. Stackelberg game models are constructed and compared to examine the equilibrium solution in relation to three modes (no government subsidies and no anti-piracy efforts; only anti-piracy efforts; and both government subsidies and anti-piracy efforts). Our analysis shows that (1) both government subsidies and anti-piracy efforts increase the quality level and unit quality signing bonus of the knowledge payment product. Meanwhile, the product’s retail price increases with anti-piracy efforts but decreases within a certain subsidy range. (2) The knowledge provider’s profit always increases with the anti-piracy effort level, while the platform’s profit is an inverted U-shaped relationship with the anti-piracy effort level. (3) Government subsidy behavior can always increase a knowledge provider’s profit but may not necessarily increase the platform’s profit. Moreover, there exists a certain threshold: when subsidies are lower (higher) than this threshold, it is more beneficial to the knowledge provider (platform). In addition, we also find that the method of high subsidies combined with a low anti-piracy effort level benefits both parties and that the subsidized party will be more sensitive. The results will provide knowledge providers and platforms with new market management insights from the perspective of government subsidies and anti-piracy efforts and guide them to make optimal decisions.