Optimal decisions and coordination of live streaming selling under revenue‐sharing contracts

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.