A Dynamic Network Economic Model of a Service-Oriented Internet with Price and Quality Competition

Chapter

Abstract

In this paper, we develop a dynamic network economic model of a service-oriented Internet with price and quality competition using projected dynamical systems theory. This research, is motivated, in part, by the Future Generation Internet (FGI), which will need to handle a spectrum of requirements of next-generation applications. The decision-makers are the content providers and the transport network providers who select the prices that they charge as well as the quality levels of their content and network provision, respectively. Consumers, that is, users at the demand markets, respond through the demand functions which reflect the attractiveness of the composition of content and network services as reflected by the prices charged and the quality levels. We prove that the stationary points of the projected dynamical system coincide with the set of solutions of a variational inequality problem and provide qualitative analysis, including stability analysis results. In addition, we describe an algorithm, which yields a discrete-time approximation of the continuous-time adjustment processes until a stationary point, equivalently, an equilibrium, is achieved. The computational procedure is then applied to solve numerical examples in order to demonstrate the generality of the framework.

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Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  • Anna Nagurney
    • 1
    • 2
  • Dong Li
    • 1
  • Sara Saberi
    • 1
  • Tilman Wolf
    • 3
  1. 1.Department of Operations and Information Management, Isenberg School of ManagementUniversity of MassachusettsAmherstUSA
  2. 2.School of Business, Economics and LawUniversity of GothenburgGothenburgSweden
  3. 3.Department of Electrical and Computer EngineeringUniversity of MassachusettsAmherstUSA

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