• Journal of the Korean Operations Research and Management Science Society
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• v.31 no.3
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• pp.107-125
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• 2006

We introduce a two-stage game theoretic model to support decision making processes for product Positioning and pricing in competitive environment. In the first stage, firms decide on entry and product position, in the second stage, firms compete with price. 'Alpha rule' is used as a choice model. Demand parameters of the choice model are estimated by conjoint analysis. We investigate conditions for the existence of Nash price equilibria in the pricing game. Nash equilibria in the entry and positioning game are produced using a concept of stable sets. An example of the online game industry in Korea is examined.

• Proceedings of the KIEE Conference
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• 2002.07a
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• pp.380-382
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• 2002

An important aspect of the study of power system markets involves the assessment of strategic behavior of participants for maximizing their profits. In models of imperfect competition of a deregulated electricity system the key task is to find the Nash equilibrium. In this paper, the bimatrix approach for finding Nash equilibria in electricity markets is investigated. This approach determines pure and mixed equilibria using the complementarity pivot algorithm. The mixed equilibrium in the matrix approach has the equal number of non-zero property. This property makes it difficult to reproduce a smooth continuous distribution for the mixed equilibrium. This paper proposes an algorithm for adjusting the quantization value of discretization to reconstruct a continuous distribution from a discrete one.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.44 no.1
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• pp.37-44
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• 2021

The information products dramatically reduce the production costs of vertically differentiated products. Information products are also more likely to be affected by network externalities. Thus the proliferation of digital products is increasing the interests in network externality and vertical product differentiation. In step with this trend, the impact of network externalities on price competition in vertically differentiated markets has been continuously studied. Existing studies related to this topic have assumed that network externalities increase consumers' willingness to pay per unit quality. The results show that higher quality products are affected more by network externality. However, network externality is essentially a concept affected by the size of the consumer, not a concept associated with quality. In this work, unlike previous studies, we present a new market model that reflects the essential definition of network externality. Based on the proposed market model, we derive both simultaneous and sequential Nash equilibria and analyze them numerically. The main results obtained from the analysis can be summarized as follows. First, network externalities primarily increase the demand for low-quality products and have a secondary impact on the demand for high-quality products. Second, the larger the quality difference between products, the more profitable they are. It also has been shown that sequential pricing methods are more advantageous in terms of revenue than simultaneous pricing method.

• Bulletin of the Korean Mathematical Society
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• v.49 no.6
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• pp.1251-1254
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• 2012

Pure-strategy Nash Equilibrium (NE) is one of the most important concepts in game theory. Tae-Hwan Yoon and O-Hun Kwon gave a "sufficient condition" for the existence of pure-strategy NEs in matrix games [5]. They also claimed that the condition was necessary for the existence of pure-strategy NEs in undominated matrix games. In this short note, we show that these claims are not true by giving two examples.

• Journal of Korean Institute of Industrial Engineers
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• v.28 no.4
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• pp.379-389
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• 2002

In this paper, we study the competition between two kinds of suppliers, a bricks and mortars(B&M) and a clicks and mortars(C&M). Using the circular spatial market model, we derive and analyze the Nash and Stackelberg equilibria as a function of offline market share and efficiency of online channel of the C&M supplier. The result can be summarized as follows: (1) Stackelberg equilibrium is always superior to the Nash equilibrium, (2) Under certain conditions, the price of online channel can be higher than that of offline channel, (3) It is impossible for the C&M supplier to encroach on all of the B&M supplier's market, (4) In some cases, the C&M supplier has incentive to lower the efficiency of its online channel for more profit.

• Journal of Korean Institute of Industrial Engineers
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• v.27 no.2
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• pp.181-189
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• 2001

The proliferation of the Internet and related technologies and applications has led to a new form of market place known as the electronic store. In this paper, we study competition between two shopping channels, an electronic store and traditional retailers. Based on the circular spatial market model, we derive the Nash and Stackelberg equilibria as a function of the efficiency of the electronic store. The result shows that the Stackelberg equilibrium is always superior to the Nash equilibrium for both channels. It is also shown that, in some cases, the electronic store has incentive to decrease its efficiency to gain more profit.

• Journal of Electrical Engineering and Technology
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• v.8 no.4
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• pp.675-685
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• 2013

Generation capacities and transmission line constraints in a competitive electricity market make it troublesome to compute Nash Equilibrium (NE) for analyzing participants' strategic generation quantities. The NE can cause a mixed strategy NE rather than a pure strategy NE resulting in a more complicated computation of NE, especially in a multiplayer game. A two-level hierarchical optimization problem is used to model competition among multiple participants. There are difficulties in using a mathematical programming approach to solve a mixed strategy NE. This paper presents heuristics applied to the mathematical programming method for dealing with the constraints on generation capacities and transmission line flows. A new formulation based on the heuristics is provided with a set of linear and nonlinear equations, and an algorithm is suggested for using the heuristics and the newly-formulated equations.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.32 no.3
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• pp.168-177
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• 2009

The proliferation of the internet and electronic commerce has given the manufacturers the opportunity of direct marketing. This study analyzes the decision of manufacturers regarding whether to sell the products through independent sales company or to sell the products to the consumer directly. To do this, a new demand function is proposed and sub and super games are modeled and analyzed based on the demand function. By analyzing the Nash equilibria, it is shown that the manufacturers' decision of direct or indirect marketing not only depends on the competitiveness between the products but the absolute and relative marketing capabilities of the manufacturers. It is also shown that, in some cases, the manufactures have incentive to rise the competitiveness between the products to maximize the channel profit.

• The Transactions of the Korean Institute of Electrical Engineers A
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• v.51 no.8
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• pp.403-408
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• 2002

As the electricity industry undergoes a process of fundamental restructuring, horizontal market power appears as a potential obstacle to a fully competitive wholesale electricity market. Market power is the ability profitably to maintain prices above competitive levels by restricting output below competitive levels. In models for imperfect competition under the consideration of the transmission constraints, the Nash equilibrium has the form of a mixed strategy. In this paper, the models for analyzing imperfect competition are compared using the solution of pure and mixed equilibria. The relation between market power and the capacity of a transmission line is investigated by imperfect competition analysis methods: Cournot, Bertrand, and Supply Curve model.

• The Transactions of the Korean Institute of Electrical Engineers A
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• v.55 no.11
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• pp.492-497
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• 2006

Nash Equilibrium (NE) is essential to investigate a participant's bidding strategy in a competitive electricity market. The transmission line constraints make it difficult to compute the NE due to causing a mixed strategy NE instead of a pure strategy NE. Computing a mixed strategy is more complicated in a multi-player game. The competition among multi-participants is modeled by a two-level hierarchical optimization problem. A mathematical programming approach is widely used in finding this equilibrium. However, there are difficulties to solving a mixed strategy NE. This paper presents two propositions to add heuristics to the mathematical programming method. The propositions are based on empirical studies on mixed strategies in numerous sample systems. Based on the propositions a new formulation is provided with a set of linear and nonlinear equations, and an algorithm is suggested for using the prepositions and the newly-formulated equations.