An Analysis of Pricing Competition for Queued Services with Multiple Providers
نویسندگان
چکیده
We model the relationship between capacity, Quality of Service (QoS) and offered prices of service providers in a competitive network services market. Capacity and QoS are linked through simple queueing formulae while QoS and price are coupled through distributions on customer preferences. We study the sensitivity of market share of providers to price, capacity and market size. We revisit the notion of “price wars” that has been shown to lead to zero profits for all providers and conclude that our more general model does admit some form of anomalous behavior, but which need not lead to zero profits. Our study reveals important properties of the equilibrium solution which may be exploited to provide useful guidelines for performance planning and pricing strategies for firms competing in network resource markets.
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