The success of firms engaged in e-commerce depends on their ability to understand and exploit the dynamics of the market. One component of this is the ability to extract maximum profit and minimize costs in the face of the harsh competition that the internet provides. We present a general framework for modeling the comeptitive equilibrium across two firms, or across a firm and the market as a whole. Within this framework, we study pricing choices and analyze the decision to outsource IT capability. Our framework is novel in that it allows for any number of distributions on usage levels, price-QoS tradeoffs, and price and cost structures.
By: Parijat Dube; Zhen Liu; Laura Wynter; Cathy Xia
Published in: RC23567 in 2005
LIMITED DISTRIBUTION NOTICE:
This Research Report is available. This report has been submitted for publication outside of IBM and will probably be copyrighted if accepted for publication. It has been issued as a Research Report for early dissemination of its contents. In view of the transfer of copyright to the outside publisher, its distribution outside of IBM prior to publication should be limited to peer communications and specific requests. After outside publication, requests should be filled only by reprints or legally obtained copies of the article (e.g., payment of royalties). I have read and understand this notice and am a member of the scientific community outside or inside of IBM seeking a single copy only.
Questions about this service can be mailed to reports@us.ibm.com .