Consumer benefit versus price elasticity of demand: a nonlinear complex system model of pricing internet services on QoS-centric architecture

Based on complex system considerations, a technoeconomic model to depict the extent of consumer reaction (in terms of consumer surplus, V) to changes in Internet pricing is developed. Relevant research pursuit tracks analytically, the nonlinear evolution of the functional relation in question with v...

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Bibliographic Details
Published in:Netnomics 2011-04, Vol.12 (1), p.31-60
Main Authors: Neelakanta, Perambur S., Sardenberg, Renata C. Tourinho
Format: Article
Language:English
Subjects:
Complex systems
Consumers
Customer services
Data Structures and Information Theory
Demand
e-Commerce/e-business
Economic Growth
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Efficiency
Elasticity
Elasticity of demand
Internet
Internet access
Internet service providers
IT in Business
Marketing
Mathematical models
Nonlinear systems
Nonlinearity
Price elasticity
Pricing
Pricing policies
Quality of service
Studies
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Summary:Based on complex system considerations, a technoeconomic model to depict the extent of consumer reaction (in terms of consumer surplus, V) to changes in Internet pricing is developed. Relevant research pursuit tracks analytically, the nonlinear evolution of the functional relation in question with various stochastic (and/or deterministic) technoeconomic parameters that interactively decide the underlying complexity. Hence, an explicit function is derived to relate the fractional change in V and the price elasticity of demand (E) specific to differentially classifiable services on Quality of Service (QoS) (DiffServ)-centric Internet architecture. The model is applied to dynamic-, smart- and static-market pricing schemes. Results are discussed with respect to some model simulations.
ISSN:1385-9587
1573-7071
DOI:10.1007/s11066-010-9055-0