Pricing patterns of cellular phones and phonecalls: a segment-level analysis

Article Abstract:

A two-periodic game theoretic model was developed to explain the effects of the presence of two market segments, heavy users and light users, on the pricing of cellular telephone handsets and services. The aim of this analysis was to determine why the price of phones has been falling over time but the price of the phonecalls has not. It postulated that the two segments, the heavy-using business/professional segment and the light-using personal segment, will vary in terms of their price sensitivity. The model described the conditions in which penetration and skimming pricing strategies for the handsets maximize profits from the perspective of sellers and generated the corresponding price of phonecalls. Analysis revealed that a competitive structure can lead to lower prices over time for the handset although this would also result in higher prices for the phone calls, depending on the production costs of the handset.

Radiotelephone communications, Cellular Mobile Radio Services, Cellular and Other Wireless Telecommunications, Radio & TV communications equipment, Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, Cellular Mobile Tel Equip, Pricing Policy, Models, Prices and rates, Wireless telephones, Cellular telephone services industry, Cellular telephone services, Pricing, Cellular telephone equipment industry, Market segmentation

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Does venture capital foster the most promising entrepreneurial firms?

Article Abstract:

Venture capital seed investments seem not to foster the most promising entrepreneurial firms. The venture capitalist's difficulty in assessing an entrepreneur's ability to develop a successful venture is the key to explaining what type of entrepreneur will chose to involve a venture capitalist in the seed stage. The authors find that venture capital backed firms are not initiated by the most capable entrepreneurs because the most able entrepreneurs will not find the prices offered by venture capitalists sufficiently attractive and will seek other sources of financing. Under the current institutional structure of the venture capital industry, a higher failure rate can be expected among venture capital backed firms than in the population of new firms in general. (Reprinted by permission of the publisher.)

Venture capital, Entrepreneurship

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