Provisioning of Large-Scale Systems: The Interplay Between Network Effects and Strategic Behavior in the User Base

• 成果类型: Article
• 署名作者: Nair, Jayakrishnan; Wierman, Adam; Zwart, Bert
• 署名单位: Indian Institute of Technology System (IIT System); Indian Institute of Technology (IIT) - Bombay; California Institute of Technology
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2015.2210
• 发表日期: 2016
• 页码: 1830-1841
• 关键词: online services; capacity provisioning; network effects; large-scale queueing systems

摘要

In this paper, we consider the problem of capacity provisioning for an online service supported by advertising. We analyse the strategic interaction between the service provider and the user base in this setting, modeling positive network effects, as well as congestion sensitivity in the user base. We focus specifically on the influence of positive network effects, as well as the impact of noncooperative behavior in the user base on the firm's capacity provisioning decision and its profit. Our analysis reveals that stronger positive network effects, as well as noncooperation in the user base, drive the service into a more congested state and lead to increased profit for the service provider. However, the impact of noncooperation, or anarchy in the user base strongly dominates the impact of network effects.