The Economic Impact of Network Pricing Intervals

Interval pricing can provide an effective means of congestion control as well as revenue generation. Using this method, prices are fixed over intervals of time, providing adaptability and predictability. An important issue is the interval duration associated with price updates. While previous research has discussed the effect of interval lengths on congestion control, this paper investigates the economic impact of price interval duration. Smaller intervals yield higher profits since prices are more responsive to changing demands. However, experimental results indicate only a modest profit gain (no more than 5%) is achieved when smaller intervals are used as opposed to larger intervals (for example 100 times longer). Given users preferences toward fewer price changes, smaller price intervals may hold few economic benefits.