Pricing strategies under heterogeneous service requirements

M.R.H. Mandjes

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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.
Original languageUndefined
Title of host publicationINFOCOM 2003. Twenty-Second Annual Joint Conference of the IEEE Computer and Communications Societies
Place of PublicationLos Alamitos
PublisherIEEE
Pages1210-1220
Number of pages11
ISBN (Print)0-7803-7752-4
Publication statusPublished - 2003
Event22nd IEEE Annual Joint Conference of the IEEE Computer and Communications Societies, INFOCOM 2003 - San Francisco, California, USA, San Francisco USA
Duration: 30 Mar 20033 Apr 2003
Conference number: 22

Publication series

Name
PublisherIEEE
Volume2

Conference

Conference22nd IEEE Annual Joint Conference of the IEEE Computer and Communications Societies, INFOCOM 2003
Abbreviated titleINFOCOM
CitySan Francisco USA
Period30/03/033/04/03
Other30 March - 3 April, 2003

Keywords

  • IR-45923
  • METIS-213611
  • EWI-17786

Cite this

Mandjes, M. R. H. (2003). Pricing strategies under heterogeneous service requirements. In INFOCOM 2003. Twenty-Second Annual Joint Conference of the IEEE Computer and Communications Societies (pp. 1210-1220). Los Alamitos: IEEE.