Internet pricing with multiple demands for quality of service option

Abstract

Price and quality differentiation are valuable tools that can provide higher revenues and increase utilization of a network. This paper discuses the pricing strategy in Internet with different demands for quality service option. We provide a pricing model based on profit maximal problem of Internet service provider (ISP). Compared with flat-rate pricing, the result of an example shows that ISP would receive more surpluses of consumers from differential pricing strategy