Abstract: Existing researches focus only on quality commitment decisions of a single provider and ignore the competitive strategies of multiple providers regarding service price and quality commitment. To make up for this deficiency, this research extends to the service price level comprehensive research, rather than constrained in a single service commitment research. To discuss service competition strategy, three competition models are built and the optimization method used. The research has found: (1) based on service price competition model, when quality commitment level is certain, once a service provider raises price, other service providers will make the same decision. However, once some service providers improve their quality commitment level, other service providers will respond with price reduction decisions. (2) In the competition model based on the quality commitment level, when the service price is certain, once a service provider improves the quality commitment level, other service providers will appropriately reduce the quality commitment level to reduce the compensation for service failure. Once some service providers improve their competitiveness from the service price level, other service providers will compensate in terms of quality commitment. (3) A competition model is established based on the study of service competition strategy. The model research shows that there must be a Nash equilibrium between service providers. A practical guidance can be induced for competitive strategies on service price and quality commitment in the service market.

Key words: quality guarantee, pricing, competitive strategy, equilibrium decision