Paper Info
Title
The effect of risk aversion and financing source on a supply chain of in-app products
Abstract
We study the decisions of a distribution platform and an app developer, both risk averse, which interact via a revenue-sharing contract under the freemium business model with optional in-app purchases. The model considers the random impact of quality on the demand potential of an in-app product, and we conduct the analysis under the mean-variance framework. We investigate two financing sources for the developer's activity: self-financing and revenue-based financing by an external investor. We reach three main findings: (i) The stochastic-dominance property exists both for the platform's and the investor's profits with regard to their revenue shares; (ii) the more risk averse the developer is, the more he tends to use revenue-based financing, but he will receive a lower financing amount; and (iii) the shift from self-financing to revenue-based financing lowers the platform's expected revenue.
Year
DOI
Venue
2022
10.1111/itor.13076
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
Keywords
DocType
Volume
supply chain of mobile apps, consignment contract with revenue sharing, freemium business model, risk aversion, financing source
Journal
29
Issue
ISSN
Citations 
4
0969-6016
0
PageRank 
References 
Authors
0.34
0
2
Name
Order
Citations
PageRank
Tal Avinadav100.34
Adi Eyal Bunker200.34