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The Role of Responsive Pricing in the Internet

Author

Listed:
  • Jeffrey K. MacKie-Mason

    (The University of Michigan)

  • Liam Murphy

    (Auburn University)

  • John Murphy

    (Dublin City University)

Abstract

The Internet continues to evolve as it reaches out to a wider user population. The recent introduction of user-friendly navigation and retrieval tools for the World Wide Web has triggered an unprecedented level of interest in the Internet among the media and the general public, as well as in the technical community. It seems inevitable that some changes or additions are needed in the control mechanisms used to allocate usage of Internet resources. In this paper, we argue that a feedback signal in the form of a variable price for network service is a workable tool to aid network operators in controlling Internet traffic. We suggest that these prices should vary dynamically based on the current utilization of network resources. We show how this responsive pricing puts control of network service back where it belongs: with the users.

Suggested Citation

  • Jeffrey K. MacKie-Mason & Liam Murphy & John Murphy, 1996. "The Role of Responsive Pricing in the Internet," Microeconomics 9606001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpmi:9606001
    Note: Type of Document - PDF; prepared on Windows; to print on Postscript; pages: 27; figures: Included. Forthcoming in _Internet Economics_, J. Bailey and L. McKnight, eds., MIT Press
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/9606/9606001.pdf
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    Cited by:

    1. Jeffrey K. MacKie-Mason & Hal Varian, 1994. "Economic FAQs About the Internet," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 75-96, Summer.

    More about this item

    Keywords

    Internet; pricing; feedback; networks;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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