Three-Person Game Model: Internet Content Regulation of Web 2.0

The introduction of Web 2.0 raises new problems of Internet content regulation. This paper sets up a three-person game model including government, Internet operators and prosumers and discusses the optimal regulation intensity of them both in non-cooperative and cooperative cases. The optimal regulation intensity in non-cooperative case is greater than that under the classical newsboy problem model. When there are irrational players, the defensive strategy for others is to ignore the existence of irrational players. Cooperation can reduce the optimal regulation intensity and bring more profit for the players. When side payments are allowed, cooperation is especially important for the government and Internet operators. Cooperation and side payments should be encouraged and realized in various ways to effectively regulate the Web 2.0 Internet content.