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Dynamic Pricing for Network Service: Equilibrium and Stability

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Author Info

  • Yasushi Masuda

    (Faculty of Science and Technology, Keio University, Yokohama, 223-8522 Japan)

  • Seungjin Whang

    (Graduate School of Business, Stanford University, Stanford, California 94305-5015)

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    Abstract

    Consider a data communication network owned and operated by a single organization. The network has an infinite number of small users and is managed by a system manager (SM) whose objective is to maximize the net value of the system as a whole. The objective of this paper is to study pricing mechanisms that induce the optimal arrival rates when the SM has no full knowledge of the demand in advance. We investigate the system behavior under three alternative dynamic pricing rules and users' expectations models, and characterize the equilibrium and its stability conditions.

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    File URL: http://dx.doi.org/10.1287/mnsc.45.6.857
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 45 (1999)
    Issue (Month): 6 (June)
    Pages: 857-869

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    Handle: RePEc:inm:ormnsc:v:45:y:1999:i:6:p:857-869

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    Related research

    Keywords: externality pricing; queueing networks; stability of equilibrium;

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    Cited by:
    1. Juthasit Rohitratana & Jorn Altmann, 2012. "Impact of Pricing Schemes on a Market for Software-as-a-Service and Perpetual Software," TEMEP Discussion Papers 201288, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Mar 2012.
    2. Joakim Kalvenes & Neil Keon, 2008. "The Market for Video on Demand," Networks and Spatial Economics, Springer, vol. 8(1), pages 43-59, March.
    3. Yezekael Hayel & Bruno Tuffin, 2006. "An Optimal Congestion and Cost-sharing Pricing Scheme for Multiclass Services," Computational Statistics, Springer, vol. 64(3), pages 445-465, December.

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