On Price and Service Competition with Complementary Goods


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Abstract


This research studies a case that two enterprises produce two different but complementary goods. The consumer demand depends on two factors: prices and service levels of the product and complementary product. This article is based on two scenarios: Nash Equilibrium and Enterprise Alliance. Game-theoretic framework is applied to find the optimal solutions for every participant. This research has conclusions as follow. Firstly, as market base of one product increases, it can benefit for both of them. Second, when one product has some economic advantage in providing service, it will have benefit from it, and the complementary goods also earn profit. Third, enterprises will provide more services, set high prices, and gain more profit in Enterprise Alliance than in Nash Equilibrium.
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Keywords


Complementary Goods; Pricing Strategy; Service Level

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References


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