Building a Cost and Profit Sharing Model for an E-business Project in Rural China: a Shapely Value Approach

With the rapid development of the information technology and e-commerce, it has become an inevitable trend to promote the application of e-business projects in rural China. Nevertheless, compared with the conventional businesses, the initial cost of an e-business project still remains relatively high in the rural areas. Therefore, it is an urgent issue to explore how to share the cost and benefit among the government and farmers for an e-business project in order to facilitate rural e-business development. By adopting the Shapley Game methodology, this paper has conducted a theoretic analysis of the cost sharing among the central government, local government and farmers, and built an investment cost sharing model (C' i= P(i)Vs(i)Vri, i=1,2,3), which is able to coordinate the benefit of all three stakeholders, and will best encourage the farmers to open family e-businesses in particular. This paper also proposes relevant policy recommendations in an effort to promote the development of e-business in rural China.