Korean Management Science Review (경영과학)

The Korean Operations Research and Management Science Society (한국경영과학회)
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Price Competition in Horizontal and Vertical Differentiation : Focusing on the WiBro and HSDPA

수직적.수평적 차별화 시장에서의 서비스 요금전략 : 와이브로와 HSDPA 서비스를 중심으로

  • Published : 2009.11.30
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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

References

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