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Strategic Market Analysis in an Electronic Service Market

Authors:
Gülfem Isiklar Alptekin

Keywords: distribution channel; multinomial logit model (MNL); game theory; genetic algorithm

Abstract:
The electronic-book (e-book) is one of the new technological changes that have significantly influenced the publishing industry in the last century. This has forced publishers to reconsider their distribution channels, since the Internet has provided a new means with which to serve readers. In this paper, a strategic market analysis is proposed from the perspective of a traditional publisher that needs to decide whether to switch to e-publishing business. The analysis framework determines the publishing market equilibrium in three different market scenarios. Besides, it shows the impact of readers’ choices and price sensitivities on the profits of publishers. The proposed framework has its basis on game theory and it is built in an oligopoly setting to reflect the severe market competition. The readers’ utilities and demands are modeled using the multinomial logit model. Although the first scenario possesses a global optimum solution, in the remaining two market scenarios genetic algorithms are used in order to find the sub-optimal solutions of the oligopolies.

Pages: 58 to 63

Copyright: Copyright (c) IARIA, 2012

Publication date: January 30, 2012

Published in: conference

ISSN: 2308-4375

ISBN: 978-1-61208-181-6

Location: Valencia, Spain

Dates: from January 30, 2012 to February 4, 2012