Internet services are traditionally priced at flat rates; however, many Internet service providers (ISPs) have recently shifted towards two-part tariffs where a data cap is imposed to restrain data demand from heavy users. Although the two-part tariff could generally increase the revenue for ISPs and has been supported by the US FCC, the role of data cap and its optimal pricing structures are not well understood. In this article, we study the impact of data cap on the optimal two-part pricing schemes for congestion-prone service markets. We model users' demand and preferences over pricing and congestion alternatives and derive the market share and congestion of service providers under a market equilibrium. Based on the equilibrium model, we characterize the two-part structures of the revenue- and welfare-optimal pricing schemes. Our results reveal that 1) the data cap provides a mechanism for ISPs to transition from the flat-rate to pay-as-you-go type of schemes, 2) both the revenue and welfare objectives of the ISP will drive the optimal pricing towards usage-based schemes with diminishing data caps, and 3) the welfare-optimal tariff comprises lower fees than the revenue-optimal counterpart, suggesting that regulators might want to promote usage-based pricing but regulate the lump-sum and per-unit fees.
From a modeling perspective, Chander @cite_10 , Reitman @cite_16 , Ma @cite_14 and our work all consider the service market with congestion externalities. Chander @cite_10 studied the quality differentiation strategy of a monopoly provider and Reitman @cite_16 studied a multi-provider price competition. Both of them modeled the market as a continuum of non-atomic users, each of which is characterized by a quality-sensitivity parameter. However, this one-dimensional model only applies for flat-rate pricing and the distribution of users was often assumed to be uniform for analytical tractability. To faithfully characterize the utility of users under two-part tiered pricing, we establish a novel two-dimensional model that describes users by their data demand and valuation on data usage. Furthermore, we analyze a class of distributions, including the uniform distribution, to understand the impact of user demand and value on the optimal pricing structures of the providers. Ma @cite_14 also considered a two-dimensional user model; however, the author only focused on the pay-as-you-go pricing, a special case of the two-part tariff structure studied in this paper.
@cite_14 @cite_16 @cite_10
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We investigate nonparametric multiproduct pricing problems, in which we want to find revenue maximizing prices for products @math based on a set of customer samples @math . We mostly focus on the unit-demand case, in which products constitute strict substitutes and each customer aims to purchase a single product. In this setting a customer sample consists of a number of nonzero values for different products and possibly an additional product ranking. Once prices are fixed, each customer chooses to buy one of the products she can afford based on some predefined selection rule. We distinguish between the min-buying, max-buying, and rank-buying models. Some of our results also extend to single-minded pricing, in which case products are strict complements and every customer seeks to buy a single set of products, which she purchases if the sum of prices is below her valuation for that set. For the min-buying model we show that the revenue maximization problem is not approximable within factor @math for some constant @math , unless @math , thereby almost closing the gap between the known algorithmic results and previous lower bounds. We also prove inapproximability within @math , @math being an upper bound on the number of nonzero values per customer, and @math under slightly stronger assumptions and provide matching upper bounds. Surprisingly, these hardness results hold even if a price ladder constraint, i.e., a predefined order on the prices of all products, is given. Without the price ladder constraint we obtain similar hardness results for the special case of uniform valuations, i.e., the case that every customer has identical values for all the products she is interested in, assuming specific hardness of the balanced bipartite independent set problem in constant degree graphs or hardness of refuting random 3CNF formulas. Introducing a slightly more general problem definition in which customers are given as an explicit probability distribution, we obtain inapproximability within @math assuming @math . These results apply to single-minded pricing as well. For the max-buying model a polynomial-time approximation scheme exists if a price ladder is given. We give a matching lower bound by proving strong NP-hardness. Assuming limited product supply, we analyze a generic local search algorithm and prove that it is 2-approximate. Finally, we discuss implications for the rank-buying model. This paper tackles the problem of joint users’ uplink transmission power and data rate allocation in multi-service two-tier femtocell networks. Each user—either macrocell (MUE) or femtocell user equipment (FUE)—is associated with a two-variable utility function that represents his perceived satisfaction with respect to his allocated resources (i.e., power and rate). User's utility function is differentiated based both on the tier that the user belongs to and the service he requests. The joint resource allocation problem is directly confronted as a two-variable optimization problem and formulated as a non-cooperative game. The theory of supermodular games is utilized towards treating the two-variable optimization problem and the inherent multidimensional competition that arises among the users. The existence of proposed game's Nash Equilibrium (NE) point is analytically shown, while game's convergence to its NE point is proven. A distributed and iterative algorithm for computing the desired NE is introduced, where the optimal values of each user's uplink transmission power and data rate are simultaneously updated at the same step. The performance of the proposed approach is evaluated via modeling and simulation and its superiority compared to other state of the art approaches is illustrated. This paper presents a comprehensive analytical study of two competitive secondary operators' investment (i.e., spectrum leasing) and pricing strategies, taking into account operators' heterogeneity in leasing costs and users' heterogeneity in transmission power and channel conditions. We model the interactions between operators and users as a three-stage dynamic game, where operators simultaneously make spectrum leasing decisions in Stage I, and pricing decisions in Stage II, and then users make purchase decisions in Stage III. Using backward induction, we are able to completely characterize the dynamic game's equilibria. We show that both operators' investment and pricing equilibrium decisions process interesting threshold properties. For example, when the two operators' leasing costs are close, both operators will lease positive spectrum. Otherwise, one operator will choose not to lease and the other operator becomes the monopolist. For pricing, a positive pure strategy equilibrium exists only when the total spectrum investment of both operators is less than a threshold. Moreover, two operators always choose the same equilibrium price despite their heterogeneity in leasing costs. Each user fairly achieves the same service quality in terms of signal-to-noise ratio (SNR) at the equilibrium, and the obtained predictable payoff is linear in its transmission power and channel gain. We also compare the duopoly equilibrium with the coordinated case where two operators cooperate to maximize their total profit. We show that the maximum loss of total profit due to operators' competition is no larger than 25 percent. The users, however, always benefit from operators' competition in terms of their payoffs. We show that most of these insights are robust in the general SNR regime. We address the problem of spectrum pricing in a cognitive radio network where multiple primary service providers compete with each other to offer spectrum access opportunities to the secondary users. By using an equilibrium pricing scheme, each of the primary service providers aims to maximize its profit under quality of service (QoS) constraint for primary users. We formulate this situation as an oligopoly market consisting of a few firms and a consumer. The QoS degradation of the primary services is considered as the cost in offering spectrum access to the secondary users. For the secondary users, we adopt a utility function to obtain the demand function. With a Bertrand game model, we analyze the impacts of several system parameters such as spectrum substitutability and channel quality on the Nash equilibrium (i.e., equilibrium pricing adopted by the primary services). We present distributed algorithms to obtain the solution for this dynamic game. The stability of the proposed dynamic game algorithms in terms of convergence to the Nash equilibrium is studied. However, the Nash equilibrium is not efficient in the sense that the total profit of the primary service providers is not maximized. An optimal solution to gain the highest total profit can be obtained. A collusion can be established among the primary services so that they gain higher profit than that for the Nash equilibrium. However, since one or more of the primary service providers may deviate from the optimal solution, a punishment mechanism may be applied to the deviating primary service provider. A repeated game among primary service providers is formulated to show that the collusion can be maintained if all of the primary service providers are aware of this punishment mechanism, and therefore, properly weight their profits to be obtained in the future.