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The demand for computer services: A disaggregate decision model
Author(s) -
Cameron T. A.,
White K. J.
Publication year - 1986
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090070108
Subject(s) - incentive , transaction cost , database transaction , microeconomics , marginal cost , economics , computer science , discrete choice , operations research , econometrics , industrial organization , database , engineering
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.