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A simulation study of competitive Internet pricing: AOL flat rates versus GSW usage prices by Dale O. Stahl; Andrew B. Whinston; Keqiang Zhang is a scholarly article available to read on EtoBox.

What is A simulation study of competitive Internet pricing: AOL flat rates versus GSW usage prices about?

To investigate the impact of profit motives on Internet pricing practices, we constructed a simulation model of two identical networks, one imposing AOL-type flat-rate access fees, and the other imposing the optimal dynamic usage pricing scleme of Gupta, Stahl and Whinston [GSWJ. Subscriptions are staggered in time and are based on the history of benefits enjoyed on both networks. We find that even when the AOL side imposes the fee that maximizes its profits, the GSW side yields five times the profits and seven times the network-wide social benefits. We also investigate a model in which two identical AOL-type networks compete with each other, and find that the Nash equilibrium access fees are virtually the same as would ensue from joint profit maxim-ization. - Keywords

Author

Dale O. Stahl; Andrew B. Whinston; Keqiang Zhang

Publisher

ACM

Published

1998

Language

EN