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Abstract
Network externality is an important feature of the era of network economy. The competition between online and offline retail pharmacies caused by network externality is getting fiercer and fiercer. In this context, we studied the long-term market competition evolution of two-channel retail pharmacies under the network external environment, in order to obtain higher profits, two-channel retail pharmacies prefer to choose profit maximization marketing strategy or market share maximization marketing strategy. Using evolutionary game theory, an evolutionary game model of two-channel retail pharmacies was established. Through the establishment of the model, obtain the payment matrix of different marketing strategies selected by the two-channel retail pharmacies and the evolution and stability of the selection of marketing strategies. The results show that when the strength of the network externality is within a certain range, the traditional retail pharmacies with higher marketing cost choose to pursue the profit maximization strategy, while online pharmacy with lower marketing costs choose market share maximization strategy to achieve greater profits; when the network externality is large, in order to maintain a certain market share in the long-term market evolution, the traditional retail pharmacy with high marketing cost chooses to pursue the market share maximization marketing strategy in order to obtain greater profits, while the online pharmacy with low marketing cost chooses to profit from the profit maximization marketing strategy.
Highlights
The development of information technology has promoted the development of the global economy
In the real market, the competition of online and offline retail pharmacies on drug sales is getting fiercer and fiercer, which is limited to the competition of price and service, and includes the competition of marketing strategies that directly affect the profits of retail pharmacies
The network externality caused by the network scale effect has an increasing influence on online and offline retail pharmacies
Summary
The development of information technology has promoted the development of the global economy. Under the market environment of network externalities, it is a research topic with wide application value to study what marketing strategies the online and offline retail pharmacies adopt to obtain the best profits. As evolutionary game theory can overcome the difficulties of neoclassical economics and classical game theory in rational hypothesis and multiple equilibrium, and provides a new analytical method for economic research, it is widely used in the research of business decision-making, such as the market competition and decision-making of oligopoly enterprises (Hansen and Samuelson (1988); Tanaka (2000)) None of these studies considered the externalities of the network, and the studies on the choice of pharmaceutical retailers’ marketing decisions under the network externality environment have not been found. This paper uses evolutionary game theory to study the impact of network externalities on the choice of marketing strategies for twochannel retail pharmacies. The conclusions of this paper with respect to its original contributions and suggested future work are discussed
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