Internet pricing: comparison and examples

The central issue of Internet economics is pricing. Cao et al. studied the Internet pricing based on the leader-follower game, the cooperative game, and the two-person game theory. In this paper, we continue our study by comparing different pricing schemes with the above approaches. These schemes include Paris metro pricing (PMP) and pricing with priority. We show that PMP does not provide better social welfare thus does not provide better cooperative solutions. Numerical examples indicate that the leader-follower game leads to an optimal solution with the same price for both “classes” of users in PMP. This contradicts to the intention of the original design of the scheme