IDEAS home Printed from
   My bibliography  Save this article

Capacity Provision Networks: Foundations of Markets for Sharable Resources in Distributed Computational Economies


  • Anna Ye Du

    () (Department of Management Science and Systems, SUNY at Buffalo, Buffalo, New York 14260)

  • Xianjun Geng

    () (Department of Information Systems and Operations Management, University of Washington, Seattle, Washington 98195)

  • Ram Gopal

    () (Department of Operations and Information Management, University of Connecticut, Storrs, Connecticut 06269)

  • R. Ramesh

    () (Department of Management Science and Systems, SUNY at Buffalo, Buffalo, New York 14260)

  • Andrew B. Whinston

    () (Department of Management Science and Information Risk, and Operations Management, University of Texas at Austin, Austin, Texas 78712)


With the rapid growth of rich-media content over the Internet, content and service providers (SP) are increasingly facing the problem of managing their service resources cost-effectively while ensuring a high quality of service (QoS) delivery at the same time. In this research we conceptualize and model an Internet-based storage provisioning network for rich-media content delivery. This is modeled as a capacity provision network (CPN) where participants possess service infrastructures and leverage their topographies to effectively serve specific customer segments. A CPN is a network of SPs coordinated through an allocation hub. We first develop the notion of discounted QoS capabilities of storage resources. We then investigate the stability of the discount factors over time and the network topography using a test-bed on the Internet through a longitudinal empirical study. Finally, we develop a market maker mechanism for optimal multilateral allocation and surplus sharing in a network. The proposed CPN is closely tied to two fundamental properties of Internet service technology: positive network externality among cooperating SPs and the property of effective multiplication of capacity allocation among several distributed service sites. We show that there exist significant incentives for SPs to engage in cooperative allocation and surplus sharing. We further demonstrate that intermediation can enhance the allocation effectiveness and that the opportunity to allocation and surplus sharing can play an important role in infrastructure planning. In conclusion, this study demonstrates the practical business viability of a cooperative CPN market.

Suggested Citation

  • Anna Ye Du & Xianjun Geng & Ram Gopal & R. Ramesh & Andrew B. Whinston, 2008. "Capacity Provision Networks: Foundations of Markets for Sharable Resources in Distributed Computational Economies," Information Systems Research, INFORMS, vol. 19(2), pages 144-160, June.
  • Handle: RePEc:inm:orisre:v:19:y:2008:i:2:p:144-160

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Sanjukta Das & Anna Ye Du & Ram Gopal & R. Ramesh, 2011. "Risk Management and Optimal Pricing in Online Storage Grids," Information Systems Research, INFORMS, vol. 22(4), pages 756-773, December.
    2. Kartik Hosanagar & Yong Tan, 2012. "Cooperative Cashing? An Economic Analysis of Document Duplication in Cooperative Web Caching," Information Systems Research, INFORMS, vol. 23(2), pages 356-375, June.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orisre:v:19:y:2008:i:2:p:144-160. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.