Pricing of dialup services: an example of congestion-dependentpricing in the Internet
Patek, S.D.
Campos-Nanez, E.
Dept. of Syst. Eng., Virginia Univ., Charlottesville, VA;
This paper appears in: Decision and Control, 2000. Proceedings of the 39th IEEE Conference on
Publication Date: 2000
Volume: 3,
On page(s): 2296-2301 vol.3
Meeting Date: 12/12/2000 - 12/15/2000
Location: Sydney, NSW, Australia
ISBN: 0-7803-6638-7
References Cited: 25
INSPEC Accession Number: 6964816
Digital Object Identifier: 10.1109/CDC.2000.914140
Current Version Published: 2002-08-06
Abstract
Recent research on dynamic pricing of multiclass loss networks has
shown that the performance of optimal static pricing approaches that of
optimal dynamic (congestion-dependent) pricing in the many small sources
limit. In our own work with similar models, we have found it difficult
to obtain large gains over static pricing in realistic settings, even
when the many small sources assumption is violated. In this paper we
give an example which is a stochastic control model for
congestion-dependent pricing of Internet services. Our formulation
captures the basic tradeoff in allocating bandwidth to two classes of
users in maximizing average net revenue. Optimal pricing requires that
the ISP anticipate and respond to changes in bandwidth consumption. Our
goal is to quantify the gain that can be achieved through dynamic
pricing over open loop pricing strategies which may or may not account
for time-of-day effects. We frame the problem as a continuous-time
Markov decision process for which we numerically compute optimal
solutions
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