Analysis for a pricing game and alliance incentive between two ISPs with different bandwidths
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    Abstract:

    ISPs with different bandwidths should have different pricing strategies. This paper analyzes a pricing game between two ISPs with different bandwidths , considering consumers with different unit time costs. We get the ISP’s first-mover advantage through comparing static and dynamic Nash equilibrium prices and incomes. We also get the conclusion that the progress of technology will benefit ISP with broad bandwidth. Then , by analyzing optimal pricing of price alliance , we get the incentive of forming a price alliance and a conclusion that low bandwidth ISP will be cleared out from the market . Finally , comparison of social welfare before and after price alliance forming is presented to point out that this type of alliance may decrease total social welfare.

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