Live streaming selling is setting off new waves worldwide, especially in China. Considering the effects of number of viewers and average reference price, this paper investigates the optimal decisions of platform's recommending effort and streamer's selling effort by differential game theory. We find that if the platform sets a higher revenue-sharing rate, its effort to recommend streamer will decrease, which could reduce the platform's and streamer's revenues. Thus, we propose a subsidy mechanism that incentivizes the streamer to increase investments in platform's recommendations, while enabling the platform and the streamer to achieve a win-win situation by setting reasonable revenue-sharing rates.
| INTRODUCTIONLive streaming selling has become one of the preferred channels for major vendors to increase the sales of products and clear inventory.Supported by the technology of the live streaming platforms, the streamers, namely, broadcasting in the chat room, have a group of loyal followers with the skills of eating, singing, dancing, making up, entertaining, and so on (Rodriguez-Gil et al., 2018). Vendors focus on the high loyalty and accuracy of fans in a specific category of streamers and then target sales based on the relevant attributes of the products (Choi & Rifon, 2012;McCormick, 2016). Especially in China, Taobao Live, Tiktok, Kuaishou, and other platforms all have already set off a blowout fever of live streaming selling (X. C. Liu, 2016). In 2018, the amount of sales of products on Taobao Live has exceeded 100 billion yuan, with a year-on-year growth rate of nearly 400%. 1 Taobao Live has developed into a venerable industry benchmark in the field of live streaming e-commerce. More and more platforms, streamers, and vendors are scrambling to follow suit to join the wave of live streaming selling.