• Title/Summary/Keyword: equilibrium-pricing

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Price-Based Quality-of-Service Control Framework for Two-Class Network Services

  • Kim, Whan-Seon
    • Journal of Communications and Networks
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    • v.9 no.3
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    • pp.319-329
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    • 2007
  • This paper presents a price-based quality-of-service (QoS) control framework for two-class network services, in which circuit-switched and packet-switched services are defined as "premium service class" and "best-effort service class," respectively. Given the service model, a customer may decide to use the other class as a perfect or an imperfect substitute when he or she perceives the higher utility of the class. Given the framework, fixed-point problems are solved numerically to investigate how static pricing can be used to control the demand and the QoS of each class. The rationale behind this is as follows: For a network service provider to determine the optimal prices that maximize its total revenue, the interactions between the QoS-dependent demand and the demand-dependent QoS should be thoroughly analyzed. To test the robustness of the proposed model, simulations were performed with gradually increasing customer demands or network workloads. The simulation results show that even with substantial demands or workloads, self-adjustment mechanism of the model works and it is feasible to obtain fixed points in equilibrium. This paper also presents a numerical example of guaranteeing the QoS statistically in the short term-that is, through the implementation of pricing strategies.

Multi-homing in Heterogeneous Wireless Access Networks: A Stackelberg Game for Pricing

  • Lee, Joohyung
    • KSII Transactions on Internet and Information Systems (TIIS)
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    • v.12 no.5
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    • pp.1973-1991
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    • 2018
  • Multimedia applications over wireless networks have been evolving to augmented reality or virtual reality services. However, a rich data size compared to conventional multimedia services causes bandwidth bottlenecks over wireless networks, which is one of the main reasons why those applications are not used widely. To overcome this limitation, bandwidth aggregation techniques, which exploit a multi-path transmission, have been considered to maximize link utilization. Currently, most of the conventional researches have been focusing on the user end problems to improve the quality of service (QoS) through optimal load distribution. In this paper, we address the joint pricing and load distribution problem for multi-homing in heterogeneous wireless access networks (ANs), considering the interests of both the users and the service providers. Specifically, we consider profit from resource allocation and cost of power consumption expenditure for operation as an utility of each service provider. Here, users decide how much to request the resource and how to split the resource over heterogeneous wireless ANs to minimize their cost while supporting the required QoS. Then, service providers compete with each other by setting the price to maximize their utilities over user reactions. We study the behaviors of users and service providers by analyzing their hierarchical decision-making process as a multileader-, multifollower Stackelberg game. We show that both the user and service provider strategies are closed form solutions. Finally, we discuss how the proposed scheme is well converged to equilibrium points.

Bidding, Pricing, and User Subscription Dynamics in Asymmetric-Valued Korean LTE Spectrum Auction: A Hierarchical Dynamic Game Approach

  • Jung, Sang Yeob;Kim, Seong-Lyun
    • Journal of Communications and Networks
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    • v.18 no.4
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    • pp.658-669
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    • 2016
  • The tremendous increase in mobile data traffic coupled with fierce competition in wireless industry brings about spectrum scarcity and bandwidth fragmentation. This inevitably results in asymmetric-valued long term evolution (LTE) spectrum allocation that stems from different timing for twice improvement in capacity between competing operators, given spectrum allocations today. This motivates us to study the economic effects of asymmetric-valued LTE spectrum allocation. In this paper, we formulate the interactions between operators and users as a hierarchical dynamic game framework, where two spiteful operators simultaneously make spectrum acquisition decisions in the upper-level first-price sealed-bid auction game, and dynamic pricing decisions in the lower-level differential game, taking into account user subscription dynamics. Using backward induction, we derive the equilibrium of the entire game under mild conditions. Through analytical and numerical results, we verify our studies by comparing the latest result of LTE spectrum auction in South Korea, which serves as the benchmark of asymmetric-valued LTE spectrum auction designs.

Pricing weather derivatives: An application to the electrical utility

  • Zou, Zhixia;Lee, Kwang-Bong
    • Journal of the Korean Data and Information Science Society
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    • v.23 no.2
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    • pp.365-374
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    • 2012
  • Weather derivatives designed to manage casual changes of weather, as opposed to catastrophic risks of weather, are relatively a new class of financial instruments. There are still many theoretical and practical challenges to the effective use of these instruments. The objective of this paper is to develop a pricing approach for valuing weather derivatives and presents a case study that is practical enough to be used by the risk managers of electrical utility firms. Utilizing daily average temperature data of Guangzhou, China from $1^{st}$ January 1978 to $31^{st}$ December 2010, this paper adopted a univariate time series model to describe weather behavior dynamics and calculates equilibrium prices for weather futures and options for an electrical utility firm in the region. The results imply that the risk premium is an important part of derivatives prices and the market price of risk affects option values much more than forward prices. It also demonstrates that weather innovation as well as weather risk management significantly affect the utility's financial outcomes.

Game Theoretic Approach for Joint Resource Allocation in Spectrum Sharing Femtocell Networks

  • Ahmad, Ishtiaq;Liu, Shang;Feng, Zhiyong;Zhang, Qixun;Zhang, Ping
    • Journal of Communications and Networks
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    • v.16 no.6
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    • pp.627-638
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    • 2014
  • In this paper, we study the joint price and power allocation in spectrum sharing macro-femtocell networks. The proposed game theoretic framework is based on bi-level Stackelberg game where macro base station (MBS) works as a leader and underlaid femto base stations (FBSs) work as followers. MBS has fixed data rate and imposes interference price on FBSs for maintaining its data rate and earns revenue while FBSs jointly adjust their power for maximizing their data rates and utility functions. Since the interference from FBSs to macro user equipment is kept under a given threshold and FBSs compete against each other for power allocation, there is a need to determine a power allocation strategy which converges to Stackelberg equilibrium. We consider two cases for MBS power allocation, i.e., fixed and dynamic power. MBS can adjust its power in case of dynamic power allocation according to its minimum data rate requirement and number of FBSs willing to share the spectrum. For both cases we consider uniform and non-uniform pricing where MBS charges same price to all FBSs for uniform pricing and different price to each FBS for non-uniform pricing according to its induced interference. We obtain unique closed form solution for each case if the co-interference at FBSs is assumed fixed. And an iterative algorithm which converges rapidly is also proposed to take into account the effect of co-tier interference on interference price and power allocation strategy. The results are explained with numerical simulation examples which validate the effectiveness of our proposed solutions.

Paid Peering: Pricing and Adoption Incentives

  • Courcoubetis, Costas;Sdrolias, Kostas;Weber, Richard
    • Journal of Communications and Networks
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    • v.18 no.6
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    • pp.975-988
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    • 2016
  • Large access providers (ISPs) are seeking for new types of business agreements and pricing models to manage network costs and monetize better the provision of last-mile services. A typical paradigm of such new pricing norms is the proliferation of paid peering deals between ISPs and content providers (CPs), while on top of this, some ISPs are already experimenting with usage-based tariffs, usually through data-plans, instead of the typical fixed-based charging. In this work we define as common platform, the infrastructure in which a single ISP transacts with several CPs through peering agreements. In this context, we examine whether, and under which market conditions, the profitability of the involved stakeholders improves when the establishment of this platform is accompanied by a monetary compensation from the CPs to the ISP (paid peering), v.s. a scenario where their deal is a typical settlement-free one. In both cases, we assume that the ISP implements a usage-based access pricing scheme, implying that end-users will pay more for higher transaction rates with the CPs. Our framework captures some of the most important details of the current market, such as the various business models adopted by the CPs, the end-users' evaluation towards the ISP's and CPs' level of investments and the traffic rates per transaction for the offered services. By analysing the equilibrium derived by a leader-follower game, it turns out (among other practical takeaways) that whether or not the profitability of a CP improves, it highly depends on whether its business model is to sell content, or if it obtains its revenue from advertisements. Finally, we extract that consumer surplus is considerably higher under paid peering, which in turn implies improved levels of social welfare.

Competitive Nonlinear Quantity Discount and Inventory Policies (경쟁환경에서의 비선형 가격정책 및 재고정책)

  • 이경근
    • Journal of the Korean Operations Research and Management Science Society
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    • v.19 no.2
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    • pp.45-56
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    • 1994
  • This paper the profit maximizing order quantity model to the symmetric oligopoly consisting of sellers of a homogeneous product who compete with each other for the same potential buyers. Buyers are classified by type, each selecting an optimal purchase quantity in response to the nonlinear quantity discount pricing schedule given by the sellers. Symmetric equilibrium and the economic quantities that sellers must determine are analysed in a Cournot framework, which explicitly depend on the number of sellers. Economic implications are obtianed from the optimality conditions based on themarket share paraments which are used to characterize the competitior's marketing strategy.

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A Study on the Selection of Slack Bus at Application of Marginal Loss-Factor in a Competitive Electricity Market (경쟁적 전력시장에서 한계손실계수 적용시 기준모선 선정에 대한 연구)

  • Kim, Sang-Hoon;Lee, Kwang-Ho
    • The Transactions of The Korean Institute of Electrical Engineers
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    • v.58 no.2
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    • pp.264-269
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    • 2009
  • Marginal Loss Factor(MLF) is represented as the sensitivity of transmission loss, which is computed from the change of the generation at slack bus by the change of the load at the arbitrary bus. The MLF dependent on the selection of slack bus is one of the key factors affecting nodal pricing, Genco's profits, social welfare(SW) and Nash Equilibrium in a competitive electricity market. This paper addresses the methodology of slack bus selection by using Cournot model of Cost Based Pool market. Numerical results from sample cases show that the slack bus of MLF of the highest average is beneficial from the view points of SW.

Resource Allocation in Spectrum Sharing ad-hoc Cognitive Radio Networks Based on Game Theory: An Overview

  • Abdul-Ghafoor, Omar B.;Ismail, Mahamod;Nordin, Rosdiadee;El-Saleh, Ayman Abd
    • KSII Transactions on Internet and Information Systems (TIIS)
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    • v.7 no.12
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    • pp.2957-2986
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    • 2013
  • The traditional approach of fixed spectrum allocation to licensed networks has resulted in spectrum underutilisation. Cognitive radio technology is envisioned as a promising solution that can be used to resolve the ineffectiveness of the fixed spectrum allocation policy by accessing the underutilised spectrum of existing technologies opportunistically. The implementation of cognitive radio networks (CRNs) faces distinct challenges due to the fact that two systems (i.e., cognitive radio (CR) and primary users (PUs)) with conflicting interests interact with each other. Specially, in self-organised systems such as ad-hoc CRNs (AHCRNs), the coordination of spectrum access introduces challenges to researchers due to rapid utilisation changes in the available spectrum, as well as the multi-hop nature of ad-hoc networks, which creates additional challenges in the analysis of resource allocation (e.g., power control, channel and rate allocation). Instead, game theory has been adopted as a powerful mathematical tool in analysing and modelling the interaction processes of AHCRNs. In this survey, we first review the most fundamental concepts and architectures of CRNs and AHCRNs. We then introduce the concepts of game theory, utility function, Nash equilibrium and pricing techniques. Finally, we survey the recent literature on the game theoretic analysis of AHCRNs, highlighting its applicability to the physical layer PHY, the MAC layer and the network layer.

Dynamic Limit and Predatory Pricing Under Uncertainty (불확실성하(不確實性下)의 동태적(動態的) 진입제한(進入制限) 및 약탈가격(掠奪價格) 책정(策定))

  • Yoo, Yoon-ha
    • KDI Journal of Economic Policy
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    • v.13 no.1
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    • pp.151-166
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    • 1991
  • In this paper, a simple game-theoretic entry deterrence model is developed that integrates both limit pricing and predatory pricing. While there have been extensive studies which have dealt with predation and limit pricing separately, no study so far has analyzed these closely related practices in a unified framework. Treating each practice as if it were an independent phenomenon is, of course, an analytical necessity to abstract from complex realities. However, welfare analysis based on such a model may give misleading policy implications. By analyzing limit and predatory pricing within a single framework, this paper attempts to shed some light on the effects of interactions between these two frequently cited tactics of entry deterrence. Another distinctive feature of the paper is that limit and predatory pricing emerge, in equilibrium, as rational, profit maximizing strategies in the model. Until recently, the only conclusion from formal analyses of predatory pricing was that predation is unlikely to take place if every economic agent is assumed to be rational. This conclusion rests upon the argument that predation is costly; that is, it inflicts more losses upon the predator than upon the rival producer, and, therefore, is unlikely to succeed in driving out the rival, who understands that the price cutting, if it ever takes place, must be temporary. Recently several attempts have been made to overcome this modelling difficulty by Kreps and Wilson, Milgram and Roberts, Benoit, Fudenberg and Tirole, and Roberts. With the exception of Roberts, however, these studies, though successful in preserving the rationality of players, still share one serious weakness in that they resort to ad hoc, external constraints in order to generate profit maximizing predation. The present paper uses a highly stylized model of Cournot duopoly and derives the equilibrium predatory strategy without invoking external constraints except the assumption of asymmetrically distributed information. The underlying intuition behind the model can be summarized as follows. Imagine a firm that is considering entry into a monopolist's market but is uncertain about the incumbent firm's cost structure. If the monopolist has low cost, the rival would rather not enter because it would be difficult to compete with an efficient, low-cost firm. If the monopolist has high costs, however, the rival will definitely enter the market because it can make positive profits. In this situation, if the incumbent firm unwittingly produces its monopoly output, the entrant can infer the nature of the monopolist's cost by observing the monopolist's price. Knowing this, the high cost monopolist increases its output level up to what would have been produced by a low cost firm in an effort to conceal its cost condition. This constitutes limit pricing. The same logic applies when there is a rival competitor in the market. Producing a high cost duopoly output is self-revealing and thus to be avoided. Therefore, the firm chooses to produce the low cost duopoly output, consequently inflicting losses to the entrant or rival producer, thus acting in a predatory manner. The policy implications of the analysis are rather mixed. Contrary to the widely accepted hypothesis that predation is, at best, a negative sum game, and thus, a strategy that is unlikely to be played from the outset, this paper concludes that predation can be real occurence by showing that it can arise as an effective profit maximizing strategy. This conclusion alone may imply that the government can play a role in increasing the consumer welfare, say, by banning predation or limit pricing. However, the problem is that it is rather difficult to ascribe any welfare losses to these kinds of entry deterring practices. This difficulty arises from the fact that if the same practices have been adopted by a low cost firm, they could not be called entry-deterring. Moreover, the high cost incumbent in the model is doing exactly what the low cost firm would have done to keep the market to itself. All in all, this paper suggests that a government injunction of limit and predatory pricing should be applied with great care, evaluating each case on its own basis. Hasty generalization may work to the detriment, rather than the enhancement of consumer welfare.

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