A simulation study of usage-based pricing strategies for packet-switched networks

This paper presents a simulation study of two proposed usage-based pricing strategies (one static, one dynamic) for computer networks. In the static pricing strategy evaluated, a price per packet is assigned and held constant over time. Results from the static strategy simulations show that network utilization decreases as the price per packet increases. Revenue, on the other hand, first increases and then falls as the price per packet increases. In the dynamic pricing strategy simulations, the price varies over time as a result of the user demand for bandwidth. As the number of users on the network increases, the price per unit of bandwidth increases. While the behaviour of the dynamic pricing scheme makes it appear promising as a pricing framework for packet-switched networks, further work is clearly required to better address the tradeoffs between network utilization, revenue, and network efficiency.