Cross-sided network effect is critical to platform based business models. In general, across a platform there¡¦re two types of users, each sitting on one side of the platform. And the platform¡¦s utility to any user in one side depends on the number of users (or the volume of usage generated by the users) in the other side. Under the discipline of micro-economy, cross-sided network effect is modeled and analyzed in the literature of ¡§two-sided markets¡¨. In this article, taking eWallet (electronically stored-value payment card) service as an example, we build a model of two-sided market, define and derive the utility functions for the platforms, and design a simulation to examine the price competition games in a duopoly market. We observe that, cross-sided network effect triggers variations in duopoly price games. By elaborating the business implication of these price game variants, we provide business intelligence for competing platforms in two-sided markets. Following the practice of game theory analysis, with our simulation we identify some famous game patterns such as prisoner¡¦s dilemma, race-around, and varies boxed-pigs games. Depending on the game pattern presented, managers can develop their own co-opetition strategy by leveraging the existing business intelligence provided in the literature of game theory. By factoring price elasticity, churn rate, strength of network effect and market share distribution in our algebraic model, we also derive the optimized prices with which incumbents and entrants can maximize their revenue in cooperative and competitive business environments. There¡¦s a growing interest in platform based business models, in which cross-sided network effect plays an important role. Our work helps to provide strategic suggestion for fixed¡Vtransaction¡Vfee platforms (such as eWallet), provide an systematic analysis methodology for platform based business models, and also provide a theoretic basics for further study in this critical area.

We model a two period game with duopoly market under either quantity or price competition. In the first period, the manufacturer decides on whether to accept the returned products. The optimal ratio of refurbishing is then determined in the second period once the manufacturer has decided to do refurbishing. We identify the optimality conditions that lead to different possible equilibrium outcomes for different scenarios in which two firms may play symmetrically or asymmetrically. Our extensive numerical analysis substantiates the analytical results and we focus on the effect on the subgame perfect equilibrium caused by various parameters. Among our results, we find that, as the return ratio increases, the profits generated from the refurbished market become harder to compensate the loss in the new product market. Besides, the increase of substitution effect in the quantity competition enhances the degree of satisfaction for the refurbished products and it hurts firm¡¦s performance in the more profitable new product market. However, the effect of substitution effect in the price competition is entirely opposite. For instance, when the substitution effect is high, only one firm enters the refurbished product market; and when the substitution effect is low, both firms enter the refurbished product market.

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The concern of this thesis is to discuss different applications of two-player game theory in economics. It is divided into two main chapters - the theoretical part and the practical part. The theoretical part is composed of the classical game theory and the game theory with vector payoffs. In the first instance basic ideas of the classical game theory is introduced. Elaboration of the duopoly model follows. Subsequently basic ideas of the theory with vector payoffs and one of the solution concepts of game theory with vector payo s are included. The practical part follows. This part contains two examples which are the real application of the concept described in the theoretical part.

京都大学 / 新制・課程博士 / 博士(経済学) / 甲第23401号 / 経博第643号 / 新制||経||298(附属図書館) / 京都大学大学院経済学研究科経済学専攻 / (主査)准教授 菊谷 達弥, 教授 関口 格, 教授 文 世一 / 学位規則第4条第1項該当 / Doctor of Economics / Kyoto University / DGAM

Revenue Management (RM) is the practice of managing perishable assets by control-ling their availability and/or prices with an objective to maximize the total revenue. Seat inventory allocation falls in the purview of quantity-based RM. The liberalization of the aviation sector and the subsequent entrance of the low-cost carriers saw an ever-increasing customer base for the airline industry. Given the large number of buyers, firms were free to decide the price at which they would sell tickets. The low-cost carriers started to follow a third degree price discrimination and segmentation of the market, charging a higher price to the market with a relatively inelastic demand. Although a lot of work has been done in the area of seat inventory allocation under a monopolistic market scenario, we realized that not a lot of work had been done in a competitive market scenario. This thesis considers the problem of seat inventory allocation and pricing in a duopoly where each of the competing airlines have two fare-classes. We consider the possibility that the same fare-class may be priced differently by the two competing airlines and allow for the over flow of passengers between the airlines in the same fare-class. In the first part of our work, we develop a non-linear mathematical model for setting the booking limits for one of the two competing air-lines such that the revenue earned is maximized. We consider over flow of passengers from one airline to another in the same fare-class in response to a price differential and compare the results obtained from our model with the standard Expected Marginal Seat Revenue (EMSR) model under a monopolistic scenario. The results show that our model gives higher revenues than that obtained from the EMSR model. In the second part of our work, we consider a non-cooperative game between two competing airlines with price cutting as the strategy to increase their demand. Through numerical computations, we identify the pure strategy Nash equilibrium. From the results, we conclude that Nash equilibrium is achieved only when both the airlines follow the same pricing strategy indicating that individual price cutting will not be beneficial. This also indicates that unless the competitors enter into a cooperative coalition with each other, they would not benefit from deep discount offers. In the third and final part, we prove theoretically the existence of pure strategy Nash equilibrium in a two airline, two fare-class problem with price sensitive over flow of customers in the same fare-class that was computationally analysed earlier. The strategy / strategies at which Nash equilibrium is achieved are identified. We show that Nash equilibrium is only achieved when both the airlines price identically. Hence, our thesis concludes that differential pricing does not hold any significance for the competing airlines from an operational perspective.

This dissertation explores several aspects of the theory in industrial organization. The first chapter builds a model with two cost asymmetric firms who not only have Cournot competition in the spot market but also have the opportunity to trade forward contracts. It is shown that with forward trading, low cost firm not always produces more than high cost firm. In an interior equilibrium, both total output and consumer welfare increase compared to the case without forward trading. When cost function is linear, forward trading is socially beneficial in that low cost firm has higher market share as well as profit share, and that total output, consumer welfare and social welfare increase. The second chapter analyzes duopoly firms' choices among ad-free and ad-supported service with different advertising displays: mandatory advertising where ads are integrated with the main content and cannot be dismissed by users; or optional advertising where users are allowed to dismiss ads at will. The model also takes into account the effect of consumers' heterogeneous ad tastes on their contribution to ad revenues. The results reveal that ad revenues intensify competition, suppress equilibrium prices and profits, and diminish the differentiation effect. The third chapter studies firms' business model choices and pricing decisions when they can choose to provide ad-free service, ad-supported service with cost-per-click (CPC) revenue model or cost-per-mille (CPM) revenue model, or a combination of them in monopoly or duopoly environment. It's shown that offering both types of ad-supported services is not an optimal strategy for a monopolist and that its optimal strategy is to vertically differentiate by providing an ad-supported service and an ad-free service. Furthermore, when the monopolist adopts the CPM-based ad revenue model, the price of the ad-supported service is more sensitive to increases in the marginal ad revenue than the case with the CPC-based model. In the equilibrium of competitive setting, exactly one firm offers an ad-supported service alone while the other firm offers the ad-free service with or without the same type of ad-supported service depending on the ad revenues. / text

This dissertation comprises three essays revisiting the classical topic of quality provision in a duopoly. Two essays consider a situation in which consumers cannot identify the origin of an individual product but observe or infer the average quality of the units brought to the market: Chapter 2 studies the case where the two producers bargain over a minimum quality standard before deciding about their own quality level, while Chapter 3 deals with the case where qualities are (exogenously) fixed and producers have to decide about the quantity they will offer for sale. The final essay (Chapter 4) switches to a perfect-information environment and asks whether the producer of an inferior variety is able to deter the entry of a superior product by having retailers sign onto exclusivity contracts. / Diss. Stockholm : Handelshögskolan, 2006

The internationalization of production requires each multinational firm to determine the local content rate for his product that is made and sold in a foreign country. In this thesis, we investigate the local content rate and pricing decisions for a multinational firm who competes with a local firm in a market without and with a local content requirement (LCR). We develop and solve a two-stage decision problem in which the multinational firm determines his optimal local content rate and the two firms then make their pricing decisions. Our analytical results show that the multinational firm sets a lower local content rate, when the competition between the product of the multinational firm and that of the local firm intensifies, consumers' valuation is more strongly affected by the quality of the product of the multinational firm, and the reduction in consumers' marginal utility is smaller. We also show that an LCR may induce the multinational firm to increase local content rate and transfer benefits from the multinational firm to the local firm. However, a very high LCR threshold will cause the multinational firm to adopt a low local content rate, resulting in a low demand and profit for both the multinational firm and the local firm.