| Abstract: | Pricing schedules for computer resources have traditionally been based on ‘cost-recovery’ principles. While economists have begun to address pricing based on marginal congestion costs, most models take demand to be exogenous and given. Discrete alternatives are inadequately treated, and aggregation of data precludes any assessment of the impact of transaction size on consumers' decisions. Using disaggregated data, this paper derives empirical results confirming that consumers are strongly influenced by transaction sizes. Simulation experiments demonstrate that price incentives designed to modify the use of computer resources are considerably more effective if the distribution of demand is weighted towards large transactions. |
