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Efficient Capacity Pricing of the Internet Services

Author

Listed:
  • Chang-Ho Yoon

    (Department of Economics, Korea University)

  • Young-Woong Song

    (SK Research Institute for SUPEX Management)

  • Byoung Heon Jun

    (Department of Economics, Korea University)

Abstract

The paper examines the possibilities to improve efficiency in Internet pricing by introducing pre-purchase contract. One can regard pre-purchase market as a device for providing guaranteed services and as an alternative to smart market that can implement expected capacity pricing in an efficient manner. We find that the pre-purchase market tends to discriminate against the consumers who are less certain about their demands. We provide a condition under which the discriminatory effect is overwhelmed by the market force, which discourages the consumers with lower value by high premium. We also suggest a solution to the discriminatory effect.

Suggested Citation

  • Chang-Ho Yoon & Young-Woong Song & Byoung Heon Jun, 2005. "Efficient Capacity Pricing of the Internet Services," Discussion Paper Series 0508, Institute of Economic Research, Korea University.
    • Handle: RePEc:iek:wpaper:0508
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    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w0508.pdf
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    References listed on IDEAS

    as
    1. McKnight, Lee W. & Boroumand, Jahangir, 2000. "Pricing Internet services: after flat rate," Telecommunications Policy, Elsevier, vol. 24(6-7), pages 565-590, August.
    2. Apostolopoulos, Theodore & Courcoubetis, Costas & Cohen, Sandra & Psiakki, Xanthi, 2000. "Multiple incentive internet pricing for national academic research networks: a case study," Telecommunications Policy, Elsevier, vol. 24(6-7), pages 591-611, August.
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    4. Shenker, Scott & Clark, David & Estrin, Deborah & Herzog, Shai, 1996. "Pricing in computer networks: Reshaping the research agenda," Telecommunications Policy, Elsevier, vol. 20(3), pages 183-201, April.
    5. James D. Dana Jr., 1998. "Advance-Purchase Discounts and Price Discrimination in Competitive Markets," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 395-422, April.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Balázs Lengyel, 2010. "The Hungarian ICT sector - a comparative CEE perspective with special emphasis on structural change," EIIW Discussion paper disbei183, Universitätsbibliothek Wuppertal, University Library.
    2. Miklós Szanyi, 2010. "Industrial Clusters: Concepts and Empirical Evidence from East-Central Europe," EIIW Discussion paper disbei181, Universitätsbibliothek Wuppertal, University Library.
    3. Paul Welfens & Christian Lutz, 2012. "Green ICT dynamics: key issues and findings for Germany," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 24(2), pages 155-163, June.
    4. Paul J.J Welfens, 2010. "European and Global Reform Requirements for Overcoming the Banking Crisis," EIIW Discussion paper disbei180, Universitätsbibliothek Wuppertal, University Library.
    5. Paul J.J. Welfens, 2011. "The Twin Crisis: From the Transatlantic Banking Crisis to the Euro Crisis?," EIIW Discussion paper disbei187, Universitätsbibliothek Wuppertal, University Library.
    6. Paul Welfens & Jens Perret, 2014. "Information & communication technology and true real GDP: economic analysis and findings for selected countries," International Economics and Economic Policy, Springer, vol. 11(1), pages 5-27, February.
    7. Jens K. Perret, 2010. "A Core-Periphery Pattern in Russia - Twin Peaks or a Rat's Tail," EIIW Discussion paper disbei178, Universitätsbibliothek Wuppertal, University Library.
    8. Christian Schröder, 2014. "Dynamics in ICT cooperation networks in selected German ICT clusters," International Economics and Economic Policy, Springer, vol. 11(1), pages 197-230, February.
    9. Balázs Lengyel, 2010. "Regional clustering tendencies of the Hungarian automotive and ICT industries in the first half of the 2000's," EIIW Discussion paper disbei184, Universitätsbibliothek Wuppertal, University Library.
    10. Andrea Szalavetz, 2010. "The Hungarian automotive sector - a comparative CEE perspective with special emphasis on structural change," EIIW Discussion paper disbei182, Universitätsbibliothek Wuppertal, University Library.
    11. Paul J.J Welfens, 2010. "Toward a New Concept of Universal Services: The Role of Digital Mobile Services and Network Neutrality," EIIW Discussion paper disbei177, Universitätsbibliothek Wuppertal, University Library.
    12. Angie Tan, 2014. "Harnessing the Power of ICT and Innovation Case Study Singapore," EIIW Discussion paper disbei201, Universitätsbibliothek Wuppertal, University Library.
    13. Grigori Feiguine & Julia Solovjova, 2014. "ICT Modernization and Globalization: Russian Perspectives," EIIW Discussion paper disbei199, Universitätsbibliothek Wuppertal, University Library.
    14. Tony Irawan, 2013. "ICT and Economic Development:Conclusion from IO Analysis for Selected ASEAN Member States," EIIW Discussion paper disbei192, Universitätsbibliothek Wuppertal, University Library.
    15. Paul J.J. Welfens & Tony Irawan, 2014. "Trade and Foreign Direct Investment: New Theoretical Approach and Empirical Findings for US Exports and European Exports," EIIW Discussion paper disbei204, Universitätsbibliothek Wuppertal, University Library.
    16. Grigori Feiguine & Julia Solovjova, 2013. "ICT Investment and Internationalization of the Russian Economy," EIIW Discussion paper disbei196, Universitätsbibliothek Wuppertal, University Library.
    17. Grigori Feiguine & Julia Solovjova, 2014. "Significance of Foreign Direct Investment for the Development of Russian ICT sector," EIIW Discussion paper disbei198, Universitätsbibliothek Wuppertal, University Library.
    18. Paul J.J Welfens, 2010. "New Open Economy Policy Perspectives: Modified Golden Rule and Hybrid Welfare," EIIW Discussion paper disbei179, Universitätsbibliothek Wuppertal, University Library.
    19. Paul J.J. Welfens, 2014. "Competition in Telecommunications and Internet Services: Problems with Asymmetric Regulations," EIIW Discussion paper disbei205, Universitätsbibliothek Wuppertal, University Library.
    20. Vladimir Udalov, 2014. "Political-Economic Aspects of Renewable Energy: Voting on the Level of Renewable Energy Support," EIIW Discussion paper disbei202, Universitätsbibliothek Wuppertal, University Library.
    21. Paul J.J. Welfens, 2012. "Towards a Euro Fiscal Union: Reinforced Fiscal and Macroeconomic Coordination and Surveillance is Not Enough," EIIW Discussion paper disbei191, Universitätsbibliothek Wuppertal, University Library.
    22. Oliver Emons, 2010. "Innovation and Specialization Dynamics in the Automotive Sector: Comparative Analysis of Cooperation & Application Networks," EIIW Discussion paper disbei186, Universitätsbibliothek Wuppertal, University Library.
    23. Stanislaw Kubielas & Magdalena Olender-Skorek, 2014. "ICT Modernization in Central and Eastern Europe," EIIW Discussion paper disbei197, Universitätsbibliothek Wuppertal, University Library.

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    More about this item

    Keywords

    Network congestion; Pre-purchase; Edge pricing; Smart market; Internet pricing;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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