Reexamining the effect of packet pricing in the wireless internet |
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Authors: | Jeong-Yoo Kim Nae-Chan Lee Dong-Ju Kim |
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Affiliation: | aDepartment of Economics, Kyung Hee University, 1 Hoegidong, Dongdaemunku, Seoul 130-701, South Korea;bHansung University, Seoul 136–792, South Korea;cKorea University, Jochiwon 339–700, South Korea |
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Abstract: | In this paper, we compare the market performances of circuit pricing whereby users are charged based on their length of usage time with packet pricing whereby users are charged based on the amount of information received. We show that, if packet pricing is introduced, the market price rises contrary to a widely held belief, but that the overall social welfare is unambiguously increased. Also, we show that a move to packet pricing lowers the price of multimedia transmission which requires a much higher speed, thereby increasing the usage of multimedia data in the absence of congestion, although this may not be the case in the presence of congestion. |
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Keywords: | Wireless Internet Circuit pricing Packet pricing Internet congestion |
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