Revenue maximization for communication networks with usage-based pricing

Authors:
Shuqin Li;Jianwei Huang;Shuo-Yen Robert Li
Affiliations:
The Chinese University of Hong Kong, Shatin, N.T., Hong Kong;The Chinese University of Hong Kong, Shatin, N.T., Hong Kong;The Chinese University of Hong Kong, Shatin, N.T., Hong Kong
Venue:
GLOBECOM'09 Proceedings of the 28th IEEE conference on Global telecommunications
Year:
2009

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Abstract

We study the optimal usage-based pricing problem in a resource-bounded network with one profit-maximizing service provider and multiple groups of surplus-maximizing users. We first analytically derive the optimal pricing mechanism that the service provider maximizes the service provider's revenue under complete network information. Then we consider the incomplete information case, and propose two incentive compatible pricing schemes that achieve different complexity and performance tradeoff. Finally, by properly combining the two pricing schemes, we can show that it is possible to maintain a very small revenue loss (e.g., 0.5% in a two-group case) without knowing detailed information of each user in the network.