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An Optimal Congestion and Cost-sharing Pricing Scheme for Multiclass Services

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  • Yezekael Hayel
  • Bruno Tuffin

Abstract

We study in this paper a social welfare optimal congestion-pricing scheme for multiclass queuing services which can be applied to telecommunication networks. Most of the literature has focused on the marginal price. Unfortunately, it does not share the total cost among the different classes. We investigate here an optimal Aumann–Shapley congestion-price which verifies this property. We extend the work on the Aumann–Shapley price for priority services, based on the results on the marginal price: instead of just determining the cost repartition among classes for given rates, we obtain the rates and charges that optimize the social welfare. Copyright Springer-Verlag 2006

Suggested Citation

  • Yezekael Hayel & Bruno Tuffin, 2006. "An Optimal Congestion and Cost-sharing Pricing Scheme for Multiclass Services," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 64(3), pages 445-465, December.
    • Handle: RePEc:spr:mathme:v:64:y:2006:i:3:p:445-465
    DOI: 10.1007/s00186-006-0075-3
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    References listed on IDEAS

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    1. MIRMAN, Leonard J. & TAUMAN, Yair, 1982. "Demand compatible equitable cost sharing prices," LIDAM Reprints CORE 472, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    3. Leonard J. Mirman & Yair Tauman, 1982. "Demand Compatible Equitable Cost Sharing Prices," Mathematics of Operations Research, INFORMS, vol. 7(1), pages 40-56, February.
    4. Moshe Haviv & Ya'acov Ritov, 1998. "Externalities, Tangible Externalities, and Queue Disciplines," Management Science, INFORMS, vol. 44(6), pages 850-858, June.
    5. Yasushi Masuda & Seungjin Whang, 1999. "Dynamic Pricing for Network Service: Equilibrium and Stability," Management Science, INFORMS, vol. 45(6), pages 857-869, June.
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