Pricing Computer Services Under Alternative Control Structures: Tradeoffs and Trends.

Author List: Dewan, Sanjeev;

Information Systems Research, 1996, Volume 7, Issue 3, Page 301-307.

This paper extends the analysis of the long-run pricing and capacity decision problem for shared computer services by Dewan and Mendelson (1990) and makes two further contributions. First, we show that simple marginal capacity cost pricing is often optimal in the absence of private user information, and it outperforms cost recovery and profit center pricing methods. Second, we provide insights into the implications of declining computing costs on the tradeoff between capacity costs and user time. In equilibrium, expected user delay costs are bounded by capacity costs due to the substitution of cheaper information processing capacity for valuable user time.

Keywords: Pricing; Computer Services; Marginal Cost

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List of Topics

#195	0.386	pricing services levels level on-demand different demand capacity discrimination mechanism schemes conditions traffic paper resource expected based constraints solution latency
#151	0.204	costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#231	0.175	information management data processing systems corporate article communications organization control distributed department capacity departments major user hardware cost applications expansion
#5	0.062	consumer consumers model optimal welfare price market pricing equilibrium surplus different higher results strategy quality cost lower competition firm paper