A framework for the study of pricing in integrated networks

Integrated networks of the near future are expected to provide a wide variety of ser-vices, which could consume widely differing amounts of resources. We present a frame-work for pricing services in integrated networks, and study the effect of pricing on user behavior and network performance. We first describe a network model that is simple, yet models details such as the wealth distribution in society, different classes of service, peak and off-peak traffic, elas-ticity of user’s demand, and call blocking due to budgetary constraints. We then perform experiments to study the effect of setup, per packet and peak load prices on the blocking probability of two classes of calls passing through a single node enforcing admission con-trol. Some selected results are that a) increasing prices first increases the net revenue to a provider, then causes a decrease b) peak-load pricing spreads network utilization more evenly, raising revenue while simultaneously reducing call blocking probability. Finally, we introduce a novel metric for comparing pricing schemes, and prove that for the most part, a pricing scheme involving setup prices is better than a pricing scheme without such a component