Price discrimination game of duopoly telecommunication operators based on system dynamics

The main factors and their interrelationship that influence the Telecom operation are analyzed firstly, and then the cause-and-effect diagram and the competitive model of duopoly telecom operators are established based on system dynamics. The number of users and turnovers within price discrimination strategy and non-price discrimination strategy are simulated. Conclusions indicated that for a single telecom operator, the number of users will decrease but the turnover will increase under the price discrimination strategy. For duopoly telecom operators, their turnovers will be lower under the price discrimination strategy compared with that under the non-discrimination strategy. The turnover of the operator which adopts the price discrimination strategy will be higher on condition that the opponent adopts non-discrimination strategy. Because of their egoism, the duopoly telecom operators always take the price discrimination strategy, which can lead to the waste of telecom resources and bring about “prisoner dilemma”.