The Internet: A Future Tragedy of the Commons?

  • Alok Gupta
  • Dale O. Stahl
  • Andrew B. Whinston
Part of the Advances in Computational Economics book series (AICE, volume 6)

Abstract

In the future, data communication networks’ interoperability will become critical from both technological and business strategy perspective. Significance of interoperability has to be evaluated in terms of the overall economic performance of the system. In this paper we present our view of the future of data communication networks, challenges in interoperability, and the economic challenges that will arise in this “real-time” economy. We provide insights derived from applying economic general equilibrium approach to these networks, e.g., the impact of competition and interoperability on the competing entities that own different parts of the network. We believe that potential excessive congestion is the single largest obstacle in the feasibility of a global, interoperable network. We discuss simulation experiments we have carried out to determine approximate priority prices in real-time and discuss the potential benefits in managing congestion through such a pricing scheme. We define a framework for policy research for an interoperable network which may facilitate electronic commerce. We also discuss the issues related to market structures such as monopoly, duopoly, and more competitive ownership of the parts of public data communication networks.

Keywords

Perfect Information Optimal Price Social Optimum Fixed Point Problem Delay Cost 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Bohn, R., H.-W. Braun, and S. Wolff, 1994, #x2018;Mitigating the coming Internet crunch: Multiple service levels via precedence’, Technical Report, San Diego, Supercomputer Center, University of California at San Diego, ftp://ftp.sdsc.edu/pub/sdsc/anr/papers/precedence.ps.Z. Google Scholar
  2. Gupta, A., D.O. Stahl, and A.B. Whinston, 1996a, #x2018;An economic approach to network computing with priority classes’, Journal of Organizational Computing and Electronic Commerce 6 (1), 71–95.CrossRefGoogle Scholar
  3. Gupta, A., D.O. Stahl, and A.B. Whinston, 1996b, #x2018;Pricing of services on The Internet’, in W.W. Cooper, D. Gibson, F. Phillips, and S. Thore (Eds), IMPACT: How 1C2 Research Affects Public Policy and Business Markets, Westport: Quorum Books, forthcoming.Google Scholar
  4. Gupta, A., D.O. Stahl, and A.B. Whinston, 1996c, A stochastic equilibrium model of Internet pricing’, Journal of Economic Dynamics and Control, forthcoming.Google Scholar
  5. MacKie-Mason, J. and H. Varian, 1995, Pricing congestible network resources’, IEEE Journal of Selected Areas in Communications 3, 32–51. Available from ftp://gopher. econ.lsa.umich.edu/pub/Papers/pricing-congestible.ps.Z.Google Scholar
  6. Mendelson, H. and S. Whang, 1990, Optimal incentive-compatible priority pricing in the M/M/1 queue’, Operations Research 38, 870–883.CrossRefGoogle Scholar
  7. Oi, W., 1971, #x2018;A Disneyland dilemma: Two-part tariffs for a Mickey Mouse monopoly’, Quarterly J. of Econ. 85, 79–96.Google Scholar
  8. Scotchmer, S., 1985a, #x2018;Profit-maximizing clubs’, J. of Public Economics 27, 25–45. Scotchmer, S., 1985b, #x2018;Two-tier pricing of shared facilities in a free-entry equilibrium’, Rand J. of Econ. 16, 456–472.CrossRefGoogle Scholar
  9. Shenker, S., 1995, #x2018;Service models and pricing policies for an integrated services Internet’, in B. Kahin and J. Keller (Eds), Public Access to the Internet, Cambridge, MA: MIT Press, forthcoming.Google Scholar
  10. Stahl, D., 1992, #x2018;Evolution of smart players’, Games and Economic Behavior 5, 604–617.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 1997

Authors and Affiliations

  • Alok Gupta
  • Dale O. Stahl
  • Andrew B. Whinston

There are no affiliations available

Personalised recommendations