Dynamic pricing by software agents
Computer Networks: The International Journal of Computer and Telecommunications Networking - electronic commerce
Inter-domain pricing: challenges and possible approaches
International Journal of Network Management
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Pricing goods properly is critical for the further growth of electronic commerce. One price discrimination technique drawn from microeconomics theory has shown promise as regards the trading of information services. This technique, however, has a serious drawback in that it assumes that a seller knows the distribution of buyers' preferences. Unfortunately, obtaining such data is not always easy. We can incorporate agent technologies into the technique, namely, by gathering sales data and updating information about buyers, and thus improve the performance. However, if a naive method for revising prices is employed, this adaptive pricing can end in failure because of buyer collusion. If collusion does occur, the rationality of any price revision is lost. To solve this problem, we have developed a pricing mechanism that can withstand buyer collusion. We provide a concrete method for calculating quality and price combinations based on a theoretical analysis of the mechanism, and then show its effectiveness by using computer simulation.