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On Competition for Market Share in a Dynamic ISP Market with Customer Loyalty: A Game-Theoretic Analysis

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Network Economics for Next Generation Networks (ICQT 2009)

Part of the book series: Lecture Notes in Computer Science ((LNCCN,volume 5539))

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Abstract

Customer loyalty as part of user behaviour has significant impact on the Internet Service Providers’ (ISPs) price setting strategies as shown recently in [1,2,3,4]. However, the issue of a dynamic ISP market, where new ISPs enter the market and try to increase their market shares by offering favourable access prices for incumbent ISPs’ loyal customers, has not been addressed yet. Furthermore, the cost of entrance is not yet properly dealt with in the previous studies. In this paper, we use the tools from game theory to understand the competition for market share in a dynamic ISP market with customer loyalty. We model the situation by a Stackelberg leader-follower game, and use the model to compute the Nash/Stackelberg equilibria of the game with customer loyalty and different cost models. For simple cost models, we give explicit formulas for the equilibria of the games. For more complex cost models, we use approximation and simulations to illustrate the dynamics of market shares in these situations.

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Author information

Authors and Affiliations

  1. High Speed Networks Laboratory Department of Telecommunication and Media Informatics, Budapest University of Technology and Economics, 2 Magyar tudósok körútja, H-1117, Budapest, Hungary

    László Gyarmati & Tuan Anh Trinh

Authors
  1. László Gyarmati
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  2. Tuan Anh Trinh
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Editor information

Editors and Affiliations

  1. Forschungszentrum Telekommunikation Wien, FTW,, Donau-City-Straße 1, 1220, Wien, Austria

    Peter Reichl

  2. Communication Systems Group, CSG, Department of Informatics, IFI, University of Zürich, UZH,, Binzmühlestrasse 14, 8050, Zürich, Switzerland

    Burkhard Stiller

  3. INRIA Rennes, Bretagne Atlantique, Campus de Beaulieu, 35042, Rennes Cedex, France

    Bruno Tuffin

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© 2009 Springer-Verlag Berlin Heidelberg

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Gyarmati, L., Trinh, T.A. (2009). On Competition for Market Share in a Dynamic ISP Market with Customer Loyalty: A Game-Theoretic Analysis. In: Reichl, P., Stiller, B., Tuffin, B. (eds) Network Economics for Next Generation Networks. ICQT 2009. Lecture Notes in Computer Science, vol 5539. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-01796-4_3

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  • DOI: https://doi.org/10.1007/978-3-642-01796-4_3

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-01795-7

  • Online ISBN: 978-3-642-01796-4

  • eBook Packages: Computer ScienceComputer Science (R0)

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