Agent-Based Simulations of the Software Market under Different Pricing Schemes for Software-as-a-Service and Perpetual Software
AbstractIn this paper, we present agent-based simulations that model the interactions between software buyers and vendors in a software market that offers Software-as-a-Service (SaaS) and perpetual software (PS) licensing under different pricing schemes. In particular, scenarios are simulated, in which vendor agents dynamically set prices. Customer (or buyer) agents respond to these prices by selecting the software license scheme according to four fundamental criteria using Analytic Hierarchy Process (AHP) as decision support mechanism. These criteria relate to finance, software capability, organization, and vendor. Three pricing schemes are implemented for our simulations: derivative-follower (DF), demand-driven (DD), and competitor-oriented (CO). The results show that DD scheme is the most effective method but hard to implement since it requires perfect knowledge about market conditions. This result is supported through a price sensitivity analysis
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Bibliographic InfoPaper provided by Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) in its series TEMEP Discussion Papers with number 201064.
Length: 22 pages
Date of creation: Jul 2010
Date of revision: Jul 2010
Publication status: Published in GECON2010, Workshop on Grids, Clouds, Systems, and Services, Ischia, Italy, 2010
Software-as-a-Service pricing; perpetual software pricing; agent-based simulation; Analytic Hierarchy Process (AHP); dynamic pricing; decision support;
Find related papers by JEL classification:
- C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- M15 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - IT Management
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-14 (All new papers)
- NEP-CMP-2010-08-14 (Computational Economics)
- NEP-IPR-2010-08-14 (Intellectual Property Rights)
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