Research Enterprise Technology Adoption Pricing Based On Sunk Costs

Rapid technology development and tremendous sunk cost is the most important character of telecommunication industry, it is a key job how to act to the situation when incumbent telecom carrier meet the competition of the entrant by new technology, China telecom industry make compelling progress after opening to competition, but still has excess competition problem arise in any service areas of telecom. It is time to reflect the action of encouraging advanced telecom technology put to use at all times in American new act in 1996, especially some operators of American and European are in debt even on the rim of bankruptcy,the above thing tell us a truth:sunk costs is a key problem when a new technology replace a new one,the need of new service supported by new tecnology restrict the use scope of innovation.the rational choice of the entrant finds a correct times to enter the market by new technology,and competes a different service with the incumbent,which is key point the entrant can succeed.due to the state property,regulation system and sunk costs,the exit barrier of old technology,the incumbent just stay the market to compete with new technology, especially the situation will lead to excess competition the ratio of base services of China telecommunication is great.The tradional economics theory think the sunk costs as investment without substitute use.that is to say,sunk costs ia s asset which has not opportunity costs,the rational decision should not think over the effect on the investment.it is a problem in reality to deny and neglect the impact sunk costs on the competition, which lead the wrong strategy of enterprise runs, some scholar think the sunk costs as a entry barrier of entrant,over emphasizes the effect on cost and competition and advantage of the incumbent,ignores the exit barrier of the incumbent,the research area seem so weakly why the incumbent hesitate to put the new technology of telecom to use.the rational choice of the incumbent is makes use the opportunity value instead of a new technology.the higher uncertainity the need of customer is, the more important effect on making decision.for telecom industry, sunk costs not only influence the decision behavior among the operator, but also clarified the deep-seated reason why excess competition and lots of repeat constructure, which lay a foundation to find a answer to a series problem.Opening to competition,telecom enterprise must cover the budget,so it is important problem to think over sunk costs.the incumbent must find a correct time to replace old tecnolgy,otherwise the cost of operation will rise and profit will be spoiled.any instance have proved that new technology of telecom industry can take advantage to the operator,meanwhile,it maybe a trap if time not correct.the worse situation of excess competiton is the incumbent pricing only be changeably cost,which will pull the entrant to price war.finally two sides suffer loss.so it is key work to ascertain the need of custmor to new service and dynamics decision process of rival.Ramsey Pricing is second-best pricing in public utility cover it investmentl,it is a new try to put a frame to think the overall welfare of producer,customer and investor,we chooses a industry prosperity index as proxy to balance the profit of whole industry chain.all that can ascertain telecommincation reasonable and healthy development to settle the pussles,the producer can't make progress when over emphasize the well-being of customer.The dissertation analyses the decision behavior of the incumbent and entrant when meet a choice of a new technology, discuss uncertainty need and sunk costs how to influence the new technology put to use, the content as followed:The first and two chapter gives a brief introduction to sunk costs research from oversea and domestic schlors,emphasizes sunk costs how to influence enterprise decision,competition behavior, especially mass sunk costs the enterprise have made investment,which lays a foundation to go on next research.The third chapter clarifies technology and economics character of telecommincation, discuss the pattern sunk costs and scale of economics on the telecom reform.main work of the parts is map out a law how the operator run and obey the rule to boost the telecom industry reasonable and healthy development.Next three parts is core work of the dissertation,the fourth chapter study how sunk costs influences the competition behavior,compares the outcomes of different stratagem sunk costs affects competition equilibria,points out material elements and behavior incentive.The fifth chapter uses the game theory on imperfection imformation to establish a model to analyse technology adoption, summarize the criterion and term, and then discuss the adoption stratagem and the incumbent enterprise exposed to monopoly and the entrant, and finds out the factor how sunk costs, network content, quality affect the innovation.The sixth chapter based on unity of production and consumer of Marx viewpoint to modify the Ramsey pricing.the new formula adds prosperity index to the modol to balance the profit of two parts.the modified pricing prove that price and average cost, marginal cost and need elasticity. Theoretically confirms the rationality that low elasticity service subsidy high elasticity service.The seventh chapter provides suggestion and way to reduce and compensate sunk costs, The last part concludes the paper and points out the direction the author should work on to intensify in next work.