Production Mode Choice and Price Competition in the Presence of Network Effects:Shrink-Wrap via Cloud Service

Published in Advanced Materials Research, 2012

indexing: “EI”

Title

Production Mode Choice and Price Competition in the Presence of Network Effects: Shrink-Wrap via Cloud Service

Authors

  • Mei-Yu Lee, Department of Applied Financial Management, Yuanpei University, Taiwan
  • Yao-Hsien Lee, Department of Finance, Chung Hua University, Taiwan
  • Ying-Jui Lu, Department of Leisure and Recreeation Managment, China University of Technology, Taiwan

Journal name

Advanced Materials Research (EI)

Abstract

We investigate how firms facing different production modes of software service determine their production mode and pricing decisions in the presence of network effects. We develop a two-stage game model to examine the network effect on the choices of production mode and the strategic behavior of the firms. We find that if all firms adopt cloud service production mode, the resulting software price is higher than if they adopt shrink-wrapped production mode. We also find that network effects lower the level of market price.

Keywords

Cloud Service, Network Effects, Production Mode, Shrink-Wrap

Citation

Mei-Yu Lee, Yao-Hsien Lee, Ying-Jui Lu, 2012, Production Mode Choice and Price Competition in The Presence of Network Effects: Shrink-wrap via Cloud Service, Advanced Materials Research, 542-543, 964-967.

View

link

Recommended citation: Mei-Yu Lee, Yao-Hsien Lee, Ying-Jui Lu, 2012, Production Mode Choice and Price Competition in The Presence of Network Effects: Shrink-wrap via Cloud Service, Advanced Materials Research, 542-543, 964-967.

Direct Link