Pricing in computer networks: motivation, formulation, and example
1993, IEEE/ACM Transactions on Networking
https://doi.org/10.1109/90.266050Abstract
We study the role of pricing policies in multiple service class networks. We first argue that some f o r m of serviceclass sensitive pricing is required for any multiclass service discipline' t o attain the desired level of performance. Borrowing heavily from the Nash implementation paradigm in economics, we then present an abstract formulation of service disciplines a n d pricing policies. This formulation allows us to describe more clearly the interplay between service disciplines a n d pricing policies in determining overall network performance. Effective multiclass service disciplines allow networks t o focus resources on performance sensitive applications, while effective pricing policies allow us t o spread the benefits of multiple service classes around t o all users, rather than just having these benefits remain exclusively with the users of applications that are performance sensitive. Furthermore, service disciplines a n d pricing policies combine to f o r m the incentive system facing a user; these incentives must be carefully tuned so that user self-interest leads to optimal overall network performance. Finally, we illustrate some of these concepts through simulation of several simple example networks. I n o u r simulations, we find that it is possible to set the prices so that users of every application type a r e more satisfied with the combined cost a n d performance of a network with service-class sensitive prices. For some application types the performance penalty received for requesting a less-than-optimal service class is offset by the reduced price of the service. F o r the other application types the monetary penalty incurred by using the more expensive, higher-quality service classes is offset by the improved performance they receive? ECENT research on computer networks has been con-R cemed almost exclusively with the hardware, software, and protocol standards needed to achieve better network performance. This research program has been an outstanding success. Today's computer networks link thousands of institutions and have become an indispensable part of the Manuscript
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