• Asia Marketing Journal
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• v.16 no.1
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• pp.35-69
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• 2014

The impact of competition on pricing has been studied in the context of counterfactual merger analyses where expected optimal prices in a hypothetical monopoly are compared with observed prices in an oligopolistic market. Such analyses would typically assume static decision making by consumers and firms and thus have been applied mostly to data obtained from consumer packed goods such as cereal and soft drinks. However such static modeling approach is not suitable when decision makers are forward looking. When it comes to the markets for durable products with indirect network effects, consumer purchase decisions and firm pricing decisions are inherently dynamic as they take into account future states when making purchase and pricing decisions. Researchers need to take into account the dynamic aspects of decision making both in the consumer side and in the supplier side for such markets. Firms in a two-sided market typically subsidize one side of the market to exploit the indirect network effect. Such pricing behaviors would be more prevalent in competitive markets where firms would try to win over the battle for standard. While such qualitative expectation on the relationship between pricing behaviors and competitive structures could be easily formed, little empirical studies have measured the extent to which the distinct pricing structure in two-sided markets depends on the competitive structure of the market. This paper develops an empirical model to measure the impact of competition on optimal pricing of durable products under indirect network effects. In order to measure the impact of exogenously determined competition among firms on pricing, we compare the equilibrium prices in the observed oligopoly market to those in a hypothetical monopoly market. In computing the equilibrium prices, we account for the forward looking behaviors of consumers and supplier. We first estimate a demand function that accounts for consumers' forward-looking behaviors and indirect network effects. And then, for the supply side, the pricing equation is obtained as an outcome of the Markov Perfect Nash Equilibrium in pricing. In doing so, we utilize numerical dynamic programming techniques. We apply our model to a data set obtained from the U.S. video game console market. The video game console market is considered a prototypical case of two-sided markets in which the platform typically subsidizes one side of market to expand the installed base anticipating larger revenues in the other side of market resulting from the expanded installed base. The data consist of monthly observations of price, hardware unit sales and the number of compatible software titles for Sony PlayStation and Nintendo 64 from September 1996 to August 2002. Sony PlayStation was released to the market a year before Nintendo 64 was launched. We compute the expected equilibrium price path for Nintendo 64 and Playstation for both oligopoly and for monopoly. Our analysis reveals that the price level differs significantly between two competition structures. The merged monopoly is expected to set prices higher by 14.8% for Sony PlayStation and 21.8% for Nintendo 64 on average than the independent firms in an oligopoly would do. And such removal of competition would result in a reduction in consumer value by 43.1%. Higher prices are expected for the hypothetical monopoly because the merged firm does not need to engage in the battle for industry standard. This result is attributed to the distinct property of a two-sided market that competing firms tend to set low prices particularly at the initial period to attract consumers at the introductory stage and to reinforce their own networks and eventually finally to dominate the market.

• International Journal of Fuzzy Logic and Intelligent Systems
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• v.13 no.1
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• pp.19-30
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• 2013

Recently, the constrained index tracking problem, in which the task of trading a set of stocks is performed so as to closely follow an index value under some constraints, has often been considered as an important application domain for control theory. Because this problem can be conveniently viewed and formulated as an optimal decision-making problem in a highly uncertain and stochastic environment, approaches based on stochastic optimal control methods are particularly pertinent. Since stochastic optimal control problems cannot be solved exactly except in very simple cases, approximations are required in most practical problems to obtain good suboptimal policies. In this paper, we present a procedure for finding a suboptimal solution to the constrained index tracking problem based on approximate dynamic programming. Illustrative simulation results show that this procedure works well when applied to a set of real financial market data.

• Journal of the military operations research society of Korea
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• v.26 no.2
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• pp.55-74
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• 2000

A knowledge-based with production rules is a representation of static knowledge of an expert. On the other hand, a real system such as the stock market is dynamic in nature. Therefore we need a method to reflect the dynamic nature of a system when we make inferences with a knowledge-based system. This paper suggests a strategy of dynamic inference that can be used to take into account the dynamic behavior of decision-making with the knowledge-based system consisted of fuzzy production rules. A degree of match(DM) between actual input information and a condition of a rule is represented by a value [0,1]. Weights of relative importance of attributes in a rule are obtained by the AHP(Analytic Hierarchy Process) method. Then these weights are applied as exponents for the DM, and the DMs in a rule are combined, with the Min operator, into a single DM for the rule. In this way, the importance of attributes of a rule, which can be changed from time to time, can be reflected in an inference with fuzzy production systems.

• Journal of the Institute of Convergence Signal Processing
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• v.12 no.3
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• pp.212-216
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• 2011

Fault detection technique for photovoltaic power systems is significant to dramatically reduce economic damage in industrial fields. This paper presents a novel fault detection approach using Fourier neural networks and stochastic decision making strategy for photovoltaic systems. We achieve neural modeling to represent its nonlinear dynamic behaviors through a gradient descent based learning algorithm. Next, a general likelihood ratio test (GLRT) is derived for constructing a decision malling mechanism in stochastic fault detection. A testbed of photovoltaic power systems is established to conduct real-time experiments in which the DC power line communication (DPLC) technique is employed to transfer data sets measured from the photovoltaic panels to PC systems. We demonstrate our proposed fault detection methodology is reliable and practicable over this real-time experiment.

• Journal of Korean Society of Rural Planning
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• v.27 no.2
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• pp.77-89
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• 2021

To predict the level of residents' participation in rural tourism project, we used agent-based model. The decision-making mechanism which calculates the utility related to attitude, subjective norm, perceived behavioral control of planned behavior theory was applied to the residents' decision to participate. As a result of the simulation over a period of 20 years, in the baseline scenario set similar to the general process of promoting rural projects, the proportion of indigenous people decreased and the participation rate decreased. In the scenarios with different learning frequencies in perceived behavioral control, overall participation rate decreased. Learning every five years had the effect of increasing the participation rate slightly. Participation rates increased significantly in the scenario that consider economic aspects and reputation in attitude and did not decline in the scenario where population composition was maintained. The virtuous cycle effect of subjective norm according to changes in participation rate due to influence of attitude and perceived behavioral control shows the dynamic relationship.

• Journal of the Korean Operations Research and Management Science Society
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• v.39 no.3
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• pp.23-40
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• 2014

This paper measures the operational efficiency of domestic online game companies and analyze its trends and patterns by using data envelopment analysis (DEA). DEA is a non-parametric approach to measuring the relative efficiency of decision-making units (DMUs) with multiple inputs and outputs. 14 online game companies are selected as DMUs and three inputs (number of employees, capital and asset) and three outputs (sales, operating profit and net profit) are selected as DEA variables. First, the output-oriented BCC model and super-efficiency model are employed to measure the static operational efficiency of the online game companies from 2003 to 2012. We also conduct the dynamic analysis with DEA window model to capture the trends of their operational efficiency influenced by internal and external environmental changes. The results are expected to provide fruitful implications for strategic decision making of online game companies and policy making for the online game industry.

• Korean Journal of Rural Living Science
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• v.5 no.1
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• pp.57-66
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• 1994

The purpose of the study was to analyze the family structure in rural Korea systematically and comprehensively according to the broad concept. The data was collected from 810 rural households by interview method with questionnaire. For the analysis, family structure was divided into aspects of static structure and dynamic structure. The static structure was constructed by two components of demographic structure and typological structure. The dynamic structure was also constructed by three components of decision making structure, role structure, and dynamic relationship structure of family members. In demographic structure, family size was 4.1 persons, families, with more female were 35.2%, and families with elder husband than wife were 82.5%, In the typological structure, nuclear family type with two-generation was predominant. In dynamic structure, role structure was autonomic type while conjugal power structure was compounded type with autonomic, syncratic, and husband-dominant type.

• Proceedings of the Korean Institute of Intelligent Systems Conference
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• 1993.06a
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• pp.1137-1140
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• 1993

A dynamic-structure system is one that has the flexibility to change the system configuration automatically so as to operate in an optimal manner. A conceptural model for a dynamic-structure system is presented in this paper. In this model, the interchangeable components of the overall system are grouped together. Their activity levels are evaluated by an intelligent preprocessor that is associated with the group. A knowledge-based task distribution system evaluates the activity levels and makes decisions as to how the components operating below capacity should be shared with workcells that have similar components that are overloaded. Associated decision making can be effected through fuzzy logic and particularly the compositional rule of inference. A simulation example is given to illustrate the application of dynamic structuring.

• Korean Management Science Review
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• v.12 no.3
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• pp.1-15
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• 1995

The Pusan Container Terminal faces a rapid increase in berthing time of container ships as well as in waiting time of external trucks, which is due to an absolute lack of yard space. This research is focused on the development of a decision support system for the planning of the container terminal yard assignment so that the yard space would be utilized most effectively. Efforts should be given to the reasonable assignment of the yard storage and the dynamic adaptation to the ever changing environment. The software introduced here is based on the know-how of the field exports and its framework takes the approach of the hierarchical decision making.

• Management Science and Financial Engineering
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• v.9 no.2
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• pp.21-45
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• 2003

Various organizational factors effect successful implementation of IT enabled business transformation. Among them, the most critical success factor is deemed to overcoming change management problem. Lots of studies have been made on implementation methodologies and business process formalizations to encourage organizational members to accept new business process changes. However, the logic of process redesign still depends on qualitative problem solving techniques mostly depending on basically human intuition such as brainstorming, cause-and-effect analysis, and so on. In this paper, we develop algorithmic procedure applicable to designing various business process changes such as process automation, business process resequencing, and more radical process integration. The framework is employed from dynamic programming approach in the literature, which is based on the decision making paradigm of organizations to abstract business processes as quantitative decision models. As such, our research can fill the gap of limited development of theory based analytic methodologies for business process design, by providing objective rationale to reach the consensus among the organizational members including senior management.