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NTU Management Review Vol. 33 No. 2 Aug. 2023

distinct values, our analysis in Proposition 6 indirectly reveals the two opposite forces that
a common cost coefficient k may generate on the revenue sharing ratios. This explains why
k does not have a monotone impact on the revenue sharing ratios in our basic model.
The impact of the two cost coefficients k and k on the advertorial allocation decision
L
H
x is also worth investigating. As it is again too complicated to obtain analytical solutions,
we resort to numerical solutions to extend our analysis previously done with Figure 6. In
Figure 8, we fix the advertorial fee A to see how the two cost coefficients affect advertorial

allocation. Similar to the implication from Figure 6, the focusing strategy is optimal
when parameter values are extreme, and the splitting strategy is optimal when parameter
values are moderate. Note that the best strategy is to allocate the whole advertorial to the
high-type creator when k is small but k is large. This somewhat surprising result can be
L
H
explained as follows. When k is large, the high-type creator does not want to exert a lot
H
of effort. In this case, the MCN must find a way to incentivize the high-type creator, who
is more likely to meet the target and win the advertorial fee for the MCN. The MCN thus

finds it optimal to allocate as much as possible to the high-type creator.

6.3 Binary Advertorial Allocation
Lastly, we discuss the impact of the flexibility of advertorial allocation. In this study,
we assume that the MCN company may split the advertorial fee and assign fractions to

Figure 8 Impact of the Two Production Costs on Advertorial Allocation

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