(An) analytical study on IT product development : technology management and social platform design

다국어 초록 (Multilingual Abstract)

This dissertation examines the domain of IT product development in two distinguished essays.
In Essay 1, the response strategy for old technology-based products in the prevalence of new technology-based products is examined. With the fast-moving technological innovation, technology firms are confronted with the issue of how to dispose of the old technology-based product. Regarding the old technology-based product’s response strategy to a prevalent new technology-based product, firms usually choose from the three options of stopping, maintaining, and improving. We consider a multiproduct monopolist that manufactures traditional, tangible goods derived by old and new technologies, respectively, and build a two-period analytical model to form the response strategy for the old technology-based product. We also investigate the action sequence about whether to stop or improve the old product before or after the new product’s network externality arises in the market, and determine the level of improvement effort exerted on the old product. The results show that the firm should maintain the old product if the new product is significantly superior to the old one. Furthermore, when the new product is superior to the old one to a certain extent, the firm has an incentive to stop or improve the old product based on the quality difference between old and new products and the marginal production cost of the improved old product. Finally, we prove that the improvement of old products can increase demands for both old and new products under specific conditions.
In Essay 2, the design of social platforms considering users’ social influence is investigated. Consumer social needs, such as a strong desire for exclusivity and conformity, are uniquely manifested in social platforms. When selecting social platforms, consumers encounter a trade-off between exclusivity (that is, mostly like-minded users) and network size (that is, too many non-experts diluting the pool). In this paper, we propose a game-theoretic model to optimize the design of social platforms, including quality and price. This study is grounded on the rational expectation framework. We investigate how social influence drives the firm’s decisions and show that a monopolist would prefer a niche social platform that targets specific user types by focusing on certain topics or functions rather than a comprehensive social platform, utilizing a multi-function, general public design. Regarding the pricing mechanism, we find that the freemium pricing mechanism is always more profitable than the free one. We provide the conditions under which each type of social platform is optimal. The monopolist’s decisions under the asymmetric social influence are further investigated, suggesting that comprehensive platforms are more profitable than niche platforms when their features well match user preferences. Finally, we show that in the duopolistic market, the ratio of advertising fees of firms plays a decisive role in equilibrium solutions. Nonetheless, the niche platform is still more profitable than the comprehensive platform under the symmetric advertising fee.

목차 (Table of Contents)

• Acknowledgement i
• Abstract ii
• Contents v
• List of Figures vii
• List of Tables viii
• Essay 1: Keep it or Kill it? The Optimal Management of Old Technology-Based Products in the Prevalence of New Technology-Based Products 1
• Chapter 1. Introduction 1
• Chapter 2. Literature Review 6
• Chapter 3. Model 9
• 3.1. Assumptions 9
• 3.1.1. Technology choice 9
• 3.1.2. Cost structure 10
• 3.1.3. Consumer Preferences 11
• 3.2. The Decision-Making Framework 12
• 3.3. The Monopolist’s Problem 14
• 3.3.1. Stopping strategy 15
• 3.3.2. Maintaining strategy 16
• 3.3.3. Improving strategy 16
• Chapter 4. Analyses 17
• 4.1. Analyses of the Benchmark Case 17
• 4.2 Analyses of Equilibrium 21
• Chapter 5. Conclusions 27
• References 29
• Appendix 32
• Essay 2: Designing Social Platforms in the Face of User Trade-Offs: The Effects of Social Influence 40
• Chapter 1. Introduction 40
• Chapter 2. Literature Review 48
• Chapter 3. Model Description 51
• 3.1 Functional Utility 52
• 3.2 Social Utility 54
• Chapter 4. Monopoly 57
• 4.1 Free Pricing Mechanism with Symmetric Social Influence 58
• 4.2 Freemium Pricing Mechanism with Symmetric Social Influence 61
• 4.3 Free Pricing Mechanism with Asymmetric Social Influence 70
• Chapter 5. Duopoly 73
• Chapter 6. Contributions, Limitations, and Future Research 77
• References 81
• Appendix 86