Reused Smartphones Pricing Analysis — A Duopoly Model Analysis with respect to Apple and Samsung Smartphones

Abstract

As technology advances, multi-touch smartphones have rapidly become a necessity in the daily lives of most users. In order to expand their market share and attract new users, new generations of smartphones are being introduced in a much shorter interval. As a result, older phones are discarded in greater speed, and thus creating more electronic waste each year. To reduce waste material, the concept of reused smartphones is proposed. In order to attract users to purchase these reused smartphones, this study aims to look into the pricing strategy for Apple and Samsung products as both are top smartphone brands with the highest market shares. Under the duopoly environment, this study uses the Cournot game model to determine the optimal solution in a price competition with Apple set to be the leader and Samsung the “follower”. While making pricing strategies, manufacturers commonly strive to maximize their profits. Two pricing functions will have a point of intersection, and the solution will be the optimal equilibrium. The model proposed in this study may be taken as reference for manufacturers to understand the reused smartphone market.