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Optimal Advertorial Allocation and Contract Design of a Multichannel Networks Company on Video Sharing
Platforms

for the reason why the independent-MCN industry structure, instead of the leagued-MCN
structure is broadly practiced in the real world.
One may argue that the difference between the independent-MCN structure and the
leagued-MCN structure contains two aspects. Hence, we offer an alternative structure:
the integrated-creator structure. Under this structure, all the settings are the same as the
independent-MCN structure except that the two creators would make their effort decisions
together, which is much closer to structure L. The industry structure of the integrated-

creator structure is depicted in Figure 7. We find that since the profit maximization
problem for the creators is simply the addition of the two creators’ profits in structure I, the
optimal results are exactly the same as those in structure I. In other words, the integrated-
creator structure is actually the same as the independent-MCN structure.

Figure 7 The Integrated-Creator Structure

6. Extensions

In this section, we relax some of our model assumptions to examine the robustness of
our major findings and generate new managerial insights.

6.1 Dependency of Meeting the Threshold
In our basic model, we assume that whether a creator’s video meets the threshold is

independent of whether the other one does. As this may not be true in some cases, here
we extend our model setting to see whether our conclusions delivered above are still valid
when the two random events are dependent. To facilitate discussion, we will use p and q
as the marginal probabilities for the type-H and type-L creators to meet the threshold, P ,
HL
P , P , and P as the joint probabilities for both creators, and only the type-H creator, only
0
H
L
the type-L creator, and no creator to meet the threshold.

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