When Virtual Network Operator Meets E-Commerce Platform: Advertising via Data Reward

In China, some e-commerce platform (EP) companies such as Alibaba and JD have been now allowed to partner with network operators (NOs) to act as virtual network operators (VNOs) to provide mobile data services for mobile users (MUs). However, it is a question worth researching on how to generate more profits for all network players after EP companies being VNOs through appropriate integration of the VNO business and the companies' own e-commerce business. To address this issue, in this work we propose a novel incentive mechanism for advertising via mobile data reward, and model it as a three-stage Stackelberg game. In Stage I, the NO decides the price of mobile data for the VNO; in Stage II, the VNO decides its data plan fee for MUs and the ad price for e-commerce merchants (EMs); in Stage III, the MUs make their own decisions on the data plan subscription and the number of ads to be watched, while the EMs decide the number of ad slots they buy from the EP. We obtain the closed-form optimal solution of the Nash equilibrium by backward induction. Simulation results show the impact of the system parameters on the utilities of game players and social welfare, and reveal that the solution can indeed lead to a quadri-win outcome in some cases. At the same time, we summarize some insights that have economic guidance.