Price competition between shrink-wrap software and cloud service firms under a stochastic model

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The authors establish a stochastic model of the price competition between shrink-wrap software and cloud service firms. They show that cloud service firms earn higher profits, but face higher risks compared to shrink-wrap software firms. In order to attract customers and earn higher profits, the authors obtain the result that shrink-wrap software firms need to focus on pricing strategies, by contrast, cloud service firms need to focus on quantity strategies

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