Browse > Article

Price Competition in Horizontal and Vertical Differentiation : Focusing on the WiBro and HSDPA  

Kim, Dow-Han (세종대학교 경영학과)
Publication Information
Korean Management Science Review / v.26, no.3, 2009 , pp. 67-78 More about this Journal
Abstract
In this paper, I analyze the mobile broadband services market characterized by vertical and horizontal differentiation. Vertical differentiation as service quality differentiation is based on the transmission speed of mobile internet service and horizontal differentiation as spatial differentiation is based on the service coverage. Theoretical explanations for the competitive price policy have been developed in the game context of WiBro which represent the high quality within the limited service coverage and HSDPA which represent relatively low quality with nation-wide service. When the WiBro has a mobile broadband service quality advantage and the difference in quality is sufficiently low, the price of WiBro with limited service coverage is relatively lower than that of HSDPA. This occurs because the advantage of WiBro's vertical service differentiation is offset by the disadvantage of horizontal differentiation. The difference in the quality of mobile internet service, however, is not too high, the price of WiBro is relatively higher than that of HSDPA. Moreover, when the service quality of WiBro is sufficiently high, the low quality HSDPA service faces no demand.
Keywords
Vertical and Horizontal Differentiation; WiBro; HSDPA; Price Competition;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
연도 인용수 순위
1 김문구, 지경용, 박종현, '신규 유무선 융합 서비스의 수요전망과 시장위상 : 와이브로를 중심으로', 'Telecomnmications Review' 제16권, 제1호 (2006), p25-34
2 Choi, S.C. and A.T. Coughlan, 'Private label positioning: Quality versus feature differentiation from the national brancl,' Journal of Retailing, Vol.82, No.2(2006), pp.79-93   DOI   ScienceOn
3 d'Aspremont, C., J. Gabszewics and J.F. Thisse, 'On Hotelling's Stability in Competition,' Econometrica, Vol.17(1979) pp.1145-1151
4 Lancaster, K, Variety, Efficiency and Equity, Columbia University Press, NY, 1979
5 Sayman, Serdar, Stephen J Hoch and Raju S. Jagmohan, 'Positioning of Store Brands,' Marketing Science, Vol.21, No.4(2002), pp.378-397   DOI   ScienceOn
6 Shaked, A and J Shtton, 'Relaxing price competition through product differentiation,' Review of Economic Studies, Vol.49(1982), pp.3-13   DOI   ScienceOn
7 김문구, 지경용, 박종현, ;디지털 컨버전스 시대의 모바일 브로드밴드 전개 : 와이브로와 HSDPA', '한국통신학회지', 제26권, 제45호(2006), pp.81-88
8 주종옥, WiBro의 IMT-2000표준채택 의의와 시사점', '정보통신정책' 제19권, 제21호(2007), pp.1-19
9 Tirole, Jean, The Theory of Industrial Organization, MIT Press, Cambridge Massachusetts, 1989
10 Gabszewics, J, and J,F. Thisse, 'Pricing competition, quality and income disparities,' Journal of Economic Theory, Vol.20(1979), pp.340-359   DOI
11 Lehmann-Grube, U., 'Strategic choice of quality when quality is costly: the persistence of the high-quality advantage,' RAND Journal of Economics, Vol.28, No.2(1997), pp.372-384   DOI   ScienceOn
12 김대중, 'WiBro 국제표준 채택과정', 'TTA Journal' 제114호(2007), pp.44-52
13 Crampes, C. and A. Hollander, 'Duopoly and quality standards,' European Economic Review, Vol.39(1995), pp.71-82   DOI   ScienceOn
14 HoteIling, H, 'Stability in competition,' Economic Journal, Vol.39(1929) pp.41-57   DOI   ScienceOn
15 Mangani, A, 'Profit and audience maximization in broadcasting markets,' Information Eanarics and Policy, Vol.15(2003), pp.305-315   DOI   ScienceOn
16 Ronnen, U, 'Minimum quality standards, fixed costs, and competition,' RAND Journal of Economics, Vol.22, No.4(1991), pp.490-504   DOI   ScienceOn
17 KT 휴대인터넷사업본부, 'WiBro와 HSDPA현황과 전망', KT, 2008
18 Aoki, R. and T.J. Prusa, 'Sequential versus simultaneous choice with endogenous quality,' International Journal of Industrial Organization, Vo1.15(1996), pp.103-121   DOI   ScienceOn