Innovation and Telecom Value Chains
Taner Bilgiç, Boğaziçi University, Industrial Engineering
Agents in telecommunications value chains are very active in innovative research and development (R&D) activities. In this talk, utilizing various stylized models we will summarize strategic interactions of telecom supply chain partners where irreversible investment in R&D activities (eventually) effect the random demand that the telecom network faces. Specifically, we show that in the competition of a network vendor and a network operator a unique Stackelberg equilibrium exists and a revenue-cost sharing mechanism coordinates this chain. Furthermore, in an extended model with two vendors and one operator we show a negative result, that an equilibrium does not exist in pure strategies. In a final model of investment only, we show the existence of unique Nash equilibrium between two network operators. We discuss the implications of all results in the context of telecommunication value chains. "Correct" investment in innovative R&D may significantly improve the performance of the telecom value chain (sometimes at the cost of whoever doing that investment).
Taner Bilgic received his B.S. and M.S. degrees in Industrial Engineering from METU. He completed his Ph.D. study at the University of Toronto before joining to Bogazici University in 1997. His research interests include competition and coordination in value chains and probabilistic networks in decision theory and causality.
Wednesday, 19 November 2008, 13:40-14:30, FENS G035