Abstract
Recently, there has been an increased research interest in telecommunication network pricing, which leads to many proposals for new pricing schemes motivated by different objectives namely: to maximize service provider’s revenue, to guarantee fairness among users and to satisfy QoS requirements for differentiated network services.
In present paper, we consider a Bertrand model with N rational Service Providers (SPs) that offer homogeneous telecommunication services to customers. We assume that all SPs offer the same services and seek to persuade more customers in the same market, we model this conflict as a non-cooperative game. On the one hand, each SP decide his policies of price and Quality of Service (QoS) in order to maximize his profit. On the other hand, we assume that the customers are boundedly rational and make their subscription decisions probabilistically, according to Luce choice probabilities. Furthermore, they decide to which SP to subscribe, each one may migrate to another SP or alternatively switch to “no subscription state” depending on the observed price/QoS. In this work, we have shown that the SPs have an interest in confusing customers i.e. more than the customers are irrational, the SPs earn more.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Basov, S., Danilkina, S.: Bertrand oligopoly with boundedly rational consumers. The BE J. Theor. Econ. 15(1), 107–123 (2015)
Mouhyiddine, T., Sabir, E., Sadik, M.: Telecommunications market share game with ambiguous pricing strategies. In: Fifth International Conference on Next Generation Networks and Services (NGNS 2014), Casablanca, Morocco, 28–30 May 2014. IEEE, Piscataway (2014)
Baslam, M., El-Azouzi, R., Sabir, E., Bouyakhf, E.: New insights from a bounded rationality analysis for strategic price-QoS war. In: International Conference on Performance Evaluation Methodologies and Tools (2012)
Kim, H.-S., Yoon, C.-H.: Determinants of subscriber churn and customer loyalty in the Korean mobile telephony market. Telecommun. Policy 28, 751–765 (2004)
Qi, J., Zhang, Y., Zhang, Y., Shi, S.: TreeLogit model for customer churn prediction. In: APSCC 2006: Proceedings of the 2006 IEEE AsiaPacific Conference on Services Computing, Washington, DC, USA, pp. 70–75. IEEE Computer Society (2006)
Milgrom, P., Roberts, J.: Rationalizability, learning, and equilibrium in games with strategic complementarities. Econometrica 58, 1255–1277 (1990)
Maille, P., Tuffin, B.: Analysis of price competition in a slotted resource allocation game. In: Proceedings of the of IEEE INFOCOM (2008)
Varian, H.: Microeconomic Analysis. Norton, New York (1992)
Koutsoupias, E., Papadimitriou, C.: Worst-case equilibria. In: Meinel, C., Tison, S. (eds.) STACS 1999. LNCS, vol. 1563, pp. 404–413. Springer, Heidelberg (1999). doi:10.1007/3-540-49116-3_38
Guijarro, L., Pla, V., Vidal, J., Martinez-Bauset, J.: Analysis of price competition under peering and transit agreements in internet service provision to peer-to-peer users. In: IEEE Consumer Communications and Networking Conference (CCNC2011), Las Vegas, Nevada USA, pp. 9–12 (2011)
Rosen, J.: Existence and uniqueness of equilibrium points for concave N-person games. Econometrica 33, 520–534 (1965)
Gabay, D., Moulin, H.: On the uniqueness and stability of Nash-equilibria in noncooperative games. In: Bensoussan, A., Kleindorfer, P., Tapiero, C.S. (eds.) Applied Stochastic Control in Econometrics and Management Science. North-Holland, Amsterdam (1980)
von Neumann, J., Morgenstern, O.: Theory of Games and Economic Behavior. Princeton University Press, Princeton (1944)
Ahmed, E., Agiza, H.N., Hassan, S.Z.: On modifications of Puu’s dynamical duopoly. Chaos, Solitons Fractals 11, 1025–1028 (2000)
Bischi, G.I., Naimzada, A.: Global analysis a dynamic duopoloy game with bounded rationality. In: Advanced in Dynamics Games and Application, Birkhauser, Basel 5, (1999)
Yassen, M.T., Agiza, H.N.: Analysis of duopoloy game with delayed bounded rationality. Appl. Math. Comput. 138, 378–402 (2003)
Elsadany, A.A.: Dynamics of a delayed duopoloy game with bounded rationality. Math. Comput. Model. 52(9–10), 1479–1489 (2010)
Maille, P., Naldi, M., Tuffin, B.: Price war with migrating customers. In: 17th Annual Meeting of the IEEE/ACM International Symposium on Modelling, Analysis and Simulation of Computer and Telecommunication Systems (MASCOTS 2009), IEEE Computer Society, London, UK, September 2009
Bishop, C.M.: Pattern Recognition and Machine Learning. Springer, New York (2006)
Pleskac, T.J.: Decision and choice: Luce’s choice axiom. In: Wright, J.D. (ed.) International Encyclopedia of the Social and Behavioral Sciences, 2nd edn., vol. 5, pp. 895–900. Elsevier, Oxford (2015)
Sutton, R.S., Barto, A.G.: Reinforcement Learning: An Introduction, 2nd edn. MIT Press, Cambridge (2012)
Chioveanu, I., Zhou, J.: Price Competition and Consumer Confusion, Department of Economics, University College London, 1 September 2009
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing AG
About this paper
Cite this paper
Ait Omar, D., Outanoute, M., Baslam, M., Fakir, M., Bouikhalne, B. (2017). Joint Price and QoS Competition with Bounded Rational Customers. In: El Abbadi, A., Garbinato, B. (eds) Networked Systems. NETYS 2017. Lecture Notes in Computer Science(), vol 10299. Springer, Cham. https://doi.org/10.1007/978-3-319-59647-1_33
Download citation
DOI: https://doi.org/10.1007/978-3-319-59647-1_33
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-59646-4
Online ISBN: 978-3-319-59647-1
eBook Packages: Computer ScienceComputer Science (R0)