A Customers’ Discrete Choice Model for Competition over Incomes in Telecommunications Market

The customers churn between service providers (SPs) due to better prices, better qualities of services or better reputation. Each provider is assumed to look for a maximized revenue, which depends on the strategy of the competitor. Several works present in the literature were based on the price as the only decision parameter, whereas others parameters such as quality of service (QoS) have a decisive impact to register to an operator rather than the others. We formulate the interaction between SPs as a non-cooperative game. First, each SP chooses QoS to guarantee and the corresponding price. Second, each customer chooses his SP and may churn to another or alternatively switch to -no subscription statedepending on the observed price/QoS. In this work, we operate Markov chain to model user's decisions, which depend on the strategic actions of SPs. We adopt logit model to represent transition rates. Finally, we provide extensive numerical results to show the importance of taking price and QoS as joint decision parameters.