Berkeley ELENG 228A - Pricing Internet Services With Multiple Providers (10 pages)

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Pricing Internet Services With Multiple Providers



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Pricing Internet Services With Multiple Providers

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Lecture Notes


Pages:
10
School:
University of California, Berkeley
Course:
Eleng 228a - High Speed Communications Networks
High Speed Communications Networks Documents

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Pricing Internet Services With Multiple Providers Linhai He and Jean Walrand Dept of Electrical Engineering and Computer Science University of California at Berkeley Berkeley CA 94709 linhai wlr eecs berkeley edu Abstract One of the challenges facing the networking industry today is to increase the profitability of service providers This calls for economic mechanisms that can enable providers to charge more for better services and collect a fair share of the resulting increased revenue In this paper we present a generic model for pricing Internet services in a multi provider network We show that non cooperative pricing is unfair and may discourage future upgrades of the network As an alternative we propose a simple revenue sharing policy and show that it is more efficient and encourages providers to collaborate without cheating We also suggest a scalable algorithm for providers to implement this policy in a distributed way and study its convergence properties 1 Introduction For historical reasons the current architecture of the Internet lacks the support for implementing efficient market mechanisms Consequently service providers have limited economic incentives to invest in technology for new services This situation limits the future evolution of the Internet To correct this state of affairs it is essential to implement economic mechanisms that would enable service providers to charge more for better services and collect a fair share of the resulting increased revenue In this paper we investigate how to design pricing schemes that could meet these criteria The idea of using economic mechanisms in network design is not new For example 1 2 3 propose pricing mechanisms that can be used for congestion control in the Internet However in these schemes the network acts as a social welfare maximizer with no self interest This assumption does not reflect the situation in today s Internet as most network service providers are in the business for making profit and are



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