Price Dynamics of Vertically Differentiated Information Markets

We explore the price dynamics of a vertically differentiated market in which two or more sellers compete to provide an information good or service to a population of buyers. Each seller offers the good or service at a fixed level of "quality", and attempts to set its price in such a way that it maximizes its own profit. Five different seller pricing strategies, ranging widely from ones that require perfect knowledge and unlimited computational power to ones that require very little knowledge or computational capability, are employed in two different buyer populations, and the resulting collective dynamics are studied using a combination of analysis and simulation. In a population of quality-sensitive buyers, all pricing strategies lead to a price equilibrium predicted by a game-theoretic analysis. However, in a population of price-sensitive buyers, most pricing strategies lead to large-amplitude cyclical price wars. The circumstances under which cyclical price wars occur can be explain..

An Approach to Pricing, Optimal Allocation and Quality of Service Provisioning In High-Speed Packet Networks

In this paper, we propose a new methodology based on economic models to provide Quality of Service (QoS) guarantees to competing traffic classes (classes of sessions) in packet networks. We consider an economic model of a packet network where resources are priced. Traffic classes compete for network resources and they purchase them to satisfy their QoS needs. Our contributions are the following: 1) We provide a new definition for QoS provisioning based on economic models (Pareto efficiency). 2) We obtain the set of optimal resource allocations (Pareto optimal) which provide QoS guarantees to competing traffic classes. 3) We show the impact on equilibrium prices and optimal allocations due to traffic load and variability, and QoS requirements. 4) We propose packet scheduling and admission policies to provide QoS guarantees to traffic classes based on available QoS and prices in the network

Profit-Driven Matching in E-Marketplaces: Trading Composable Commodities

. We are witnessing the dawn and emergence of a new breed of businesses over the Internet, such as electronic intermediaries, which are not only reducing search costs, but also aiming to create efficient markets for businesses and consumers to conduct commerce over the Internet. Among these intermediaries, Electronic Marketplaces are emerging to provide value by streamlining commerce among diverse buyers and sellers and creating fair trading environments. We envision that these E-Marketplaces will play a very significant role in matching buyers and sellers and increasing market efficiency by satisfying a variety of objectives ranging from pure profit maximization to guaranteeing a target market liquidity. In this paper, we consider a specific E-Marketplace for trading soft composable commodities such as bandwidth and application quality of service, where buyers and sellers submit bids and offers to the marketplace to trade bandwidth products. We develop and analyze the pe..