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Pricing for Electronic Commerce

Author

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  • Dale Stahl

    (The University of Texas at Austin)

Abstract

Perhaps the greatest technological innovation of the next several decades will be universal access and utilization of the Internet. Already congestion is becoming a serious impediment to efficient utilization. We introduce a stochastic equilibrium concept for a general mathematical model of the Internet, and demonstrate that the efficient social welfare maximizing stochastic allocation of Internet traffic can be supported by optimal congestion prices. We further demonstrate via simulation modelling that approximately optimal prices can be readily computed and implemented in a decentralized system. We further propose simulation modeling to study the impact of private strategic pricing and public policies.

Suggested Citation

  • Dale Stahl, "undated". "Pricing for Electronic Commerce," Computing in Economics and Finance 1996 _054, Society for Computational Economics.
    • Handle: RePEc:sce:scecf6:_054
    as

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    References listed on IDEAS

    as
    1. Stahl, Dale II, 1986. "Stochastic decentralization of competitive allocations," Economics Letters, Elsevier, vol. 22(2-3), pages 111-113.
    2. Mackie-Mason, J.K. & Varian, H.R., 1993. "Pricing the Internet," Memorandum 1993_020, Oslo University, Department of Economics.
    3. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    4. Naor, P, 1969. "The Regulation of Queue Size by Levying Tolls," Econometrica, Econometric Society, vol. 37(1), pages 15-24, January.
    5. Hau Leung Lee & Morris A. Cohen, 1985. "Multi-Agent Customer Allocation in a Stochastic Service System," Management Science, INFORMS, vol. 31(6), pages 752-763, June.
    6. Intriligator, Michael D., 2000. "Mathematical programming with applications to economics," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 1, chapter 2, pages 53-91, Elsevier.
    Full references (including those not matched with items on IDEAS)

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