Research on Optimized Incentive Contract Between Telecommunications Operators and Terminal Manufacturers Based on Service Customization

The paper proposes that the terminal customization is one of the development trends of the third generation (3G) telecommunications industry in the future aiming at the existing problem of the independent development mode between telecommunications operators and terminal manufacturers. It establishes the principal-agent model of telecommunications operators and terminal manufacturers based on service customization, designs the optimized incentive contract which telecommunications operators give terminal manufacturers, analyzes the relationships among the effort degree, ability and cost coefficient of telecommunications operators and terminal manufacturers and incentive intensity, compares that the change of each parameter results in the influence of the incentive intensity and both profits using numerical analysis, which provides theory evidence for telecommunications operators to stimulate terminal manufacturers to participate for the service customization.