Title: Price optimisation using business risk analysis and game theory

Authors: Rozalia Konkoly, Istvan Fekete

Addresses: PKI Telecommunications Development Institute Matav Rt., Hungarian Telecommunications Company, H-1502. Budapest, Pf. 520., Hungary. ' Business Services Line of Business Matav Rt., Hungarian Telecommunications Company, H-1013 Budapest, Krisztina krt. 55., Hungary

Abstract: We have developed a new approach to supporting business decisions that can be used to evaluate the risks inherent in the competitive environment. We have shown that the results of business risk analysis can be used for building a game theory model. By using risk analysis and game theory together, we were able to take into account the expected behaviour of the competitors and the interrelations among them. We present a case study in the Hungarian telecommunications sector to show how the result of the risk analysis of the net cost of a given product can be built into a game theory model.

Keywords: business risk analysis; risk management plan; real options; Monte Carlo simulation; game theory; oligopoly market; price competition; demand curve; migration function; provider selection; price optimisation; Hungary; business intelligence; telecommunications industry.

DOI: 10.1504/IJIEM.2005.007231

International Journal of Internet and Enterprise Management, 2005 Vol.3 No.1, pp.63 - 77

Published online: 25 Jun 2005 *

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