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Discriminatory Congestion Pricing of Network Services: A Game Theoretic Approach Using Adverse Selection

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Authors
Rho, Sangkyu; An, Jungnam; Chong, Song
Issue Date
2007
Publisher
College of Business Administration (경영대학)
Citation
Seoul Journal of Business Vol13(1): 77~98(2007)
Keywords
congestion pricing; congestion externalities; market segmentation; adverse selection
Abstract
The quality of network services deteriorates as network utilization
increases beyond a certain point, i.e., congestion externalities. Many
researchers have proposed congestion pricing models which internalize
congestion externalities. However, most studies are based on a unit
pricing which cannot reflect user’s different congestion sensitivities. The
purpose of this paper is to propose a discriminatory congestion pricing
model using adverse selection. Our pricing mechanism provides a congestion-sensitive user with a high quality service for a higher price
and a congestion-tolerant user with a low quality service for a lower
price. Our model allows service providers to better control congestions
while maximizing their profits.
ISSN
1226-9816
Language
English
URI
http://hdl.handle.net/10371/1806
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 13, Number 1/2 (2007)
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