Pricing in computer networks: motivation, formulation, and example

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Abstract
The role of pricing policies in multiple service class networks is studied. An abstract formulation of service disciplines and pricing policies that allows the interplay between service disciplines and pricing policies in determining overall network performance to be described more clearly is presented. Effective multiclass service disciplines allow networks to focus resources on performance-sensitive applications, while effective pricing policies allows the benefits of multiple service classes to be spread around to all users. Furthermore, the incentives formed by service disciplines and pricing policies must be carefully tuned so that user self-interest leads to optimal overall network performance. These concepts are illustrated through simulation of several simple example networks. It is found that it is possible to set the prices so that users of every application type are more satisfied with the combined cost and performance of a network with service-class-sensitive prices.<>

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