Pricing strategies under heterogeneous service requirements


Mandjes, Michel (2003) Pricing strategies under heterogeneous service requirements. In: IEEE INFOCOM 2003: Twenty-Second Annual Joint Conference of the IEEE Computer and Communications Societies, 30 March - 3 April, 2003, San Francisco, California, U.S.A. (pp. pp. 1210-1220).

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Abstract:This paper analyzes a communication network with heterogeneous customers. We investigate priority queueing as a way to differentiate between these users. Customers join the network as long as their utility (which is a function of the queueing delay) is larger than the price of the service. We focus on the specific situation in which two types of users play a role: one type is delay-sensitive ('voice'), whereas the other is delay-tolerant ('data'); these preferences are reflected in their utility curves. Two models are considered: in the first the network determines the priority class of the users, whereas the second model leaves this choice to the users. For both models we determine the prices that maximize the provider's profit. Importantly, these situations do not coincide. Our study uses elements from queueing theory, but also from microeconomics and game theory (e.g., the concept of a Nash equilibrium). We conclude the paper by considering a model in which throughput (rather than delay) is the main performance measure. Again the pricing strategy exploits the heterogeneity in required service and willingness-to-pay.
Item Type:Conference or Workshop Item
Copyright:©2003 IEEE
Electrical Engineering, Mathematics and Computer Science (EEMCS)
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