Dynamic Pricing for Network Service: Equilibrium and Stability
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.
Volume (Year): 45 (1999)
Issue (Month): 6 (June)
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- Mackie-Mason, J.K. & Varian, H.R., 1993.
"Pricing the Internet,"
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- Milgrom, Paul & Roberts, John, 1991. "Adaptive and sophisticated learning in normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 82-100, February.
- Marc Nerlove, 1958. "Adaptive Expectations and Cobweb Phenomena," The Quarterly Journal of Economics, Oxford University Press, vol. 72(2), pages 227-240. Full references (including those not matched with items on IDEAS)
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