Service Level Agreements in Internet Connectivity Markets: Relationship Between Price and Capacity

摘要

We set a game theoretical model to study priority pricing scheme in a cell-switched data network. We first study the two-priority model. The short run problem is defined as choosing profit maximizing prices under exogenous capacity level. We find that, in the absence of user interaction, the monopoly NAPP maximizes her/his profits by choosing the highest possible price differential between the high and low priorities. In order to meet the users' expected delay requests, lower quality ISP provides the services for free while higher level service provider sets a price level which is a function of the link capacity, mean number of packets sent as well as the bounds on the expected delay terms. After completing the solution of the model, we will extend this study by incorporating strategic manipulation of the allocation mechanism, increasing the number of players and incorporating uncertainty in the message transmission rates.