Dynamic Pricing for Network Service: Equilibrium and Stability

Yasushi Masuda and Seungjin Whang
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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

Management Science, 1999, vol. 45, issue 6, 857-869

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.

Keywords: externality pricing; queueing networks; stability of equilibrium (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (19)

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