We describe the basic economic theory of pricing a congestible resource such as an ftp server, a router, a Web site, etc. In particular, we examine the implications of " congestion pricing " as a way to encourage efficient use of network resources. We explore the implications of flat pricing and congestion pricing for capacity expansion in centrally… (More)
This paper was prepared for the conference " Public Access to the Internet, " JFK School of Government, May 26–27 , 1993. We describe the technology and cost structure of the NSFNET backbone of the Internet, and discuss how one might price Internet access and use. We argue that usage-based pricing is likely to be necessary to control congestion on the… (More)
I describe a goodness-of-fit measure for revealed preference tests. This index can be used to measure the degree to which an economic agent violates the model of utility maximization. I calculate the violation indices for a 38 consumers and find that the observed choice behavior is very close to optimizing behavior.
We describe a generalization of the Vickrey auction. Our mechanism extends the auction to implement efficient allocations for problems with more than one good, multiple units for the goods, and externalities. The primary restriction on preferences is that they must be quasilinear.
The field of economic mechanism design has been an active area of research in economics for at least 20 years. This field uses the tools of economics and game theory to design ''rules of interaction'' for economic transactions that will, in principle, yield some desired outcome. In this paper I provide an overview of this subject for an audience interested… (More)
System reliability often depends on the effort of many individuals, making reliability a public good. It is well-known that purely voluntary provision of public goods may result in a free rider problem: individuals may tend to shirk, resulting in an inefficient level of the public good. How much effort each individual exerts will depend on his own benefits… (More)
The rapid advance in information technology now makes it feasible for sellers to condition their price offers on consumers' prior purchase behavior. In this paper we examine when it is profitable to engage in this form of price discrimination. Our baseline model involves rational consumers with constant valuations for the good being sold and a monopoly… (More)