Year: 2005
Type: dissertation
Abstract: In recent years, the rapid development of Internet has significantly changed \npeople’s life style and the way business is conducted, even though accompanied by \nfear and sceptism. Research on developing new business models regarding to innov \native use of the Internet has become very important to justify the value of Internet. \nIn addition, designing new pricing mechanisms tailored for the new Internet access \ninfrastructures also has great values in supporting and expanding the Internet usage. \nThis dissertation contains three essays exploring those issues. In the first \nessay, an emerging Internet Business the “Prediction Market” is described and \nexamined. The market is specifically designed for collecting dispersed information \nfrom a wide variety of agents. In order to achieve efficient information elicitation \nand aggregation, the agents are characterized according to their information pre \ncision and the cost to induce their information. The optimal selection rules are \ncharacterized and a betting mechanism which can implement this selection rule is \nproposed and analyzed. \nThe second essay proposes a new pricing mechanism for price discrimination \nunder demand uncertainty, which can be applied to allocating Internet access. An \noption framework is used so that users with higher valuation for Internet usage can \npurchase options beforehand, which gives them the right to exercise the option and \nget guaranteed demand execution. Such an option framework has three advantages \ncompared with previous congestion pricing mechanism. First, it helps reveal the \ncustomers valuation information ex ante and hence allows the service provider to \nconduct price discrimination. Second, it improves allocation efficiency when capacity \nis tight. Lastly, it provides customers’ demand information ex ante to facilitate the \nservice provider’s capacity investment decision. \nThethirdessayexaminesthepricingissueforanemergingnetworkinfrastruc \nture – the Wireless Mesh Network. In such a network, every user can become a \nrouter themselves and hence they have the right to decide whether and how much \ntraffic they pass to their neighbors. The overall network quality is highly sensitive \nto where the users are located and whether they have incentive to share their device \ncapacity with their neighbors. The profitability of a decentralized linear pricing \nscheme is analyzed under such a network infrastructure. The efficiency loss due to \nthe individual users’ pricing power is estimated and comparison is conducted with \ntraditional Wi-Max infrastructure.
Authors: Andrew B. Whinston, Fang Fang
Institution: The University of Texas at Austin
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2145939302