Analysis of Paris Metro Pricing Strategy for QoS with a Single Service Provider

Abstract

As the diversity ofI nternet applications increases, so does the need for a variety of quality-of-service (QoS) levels on the network. The Paris Metro Pricing (PMP) strategy uses pricing as a tool to implement network resource allocation for QoS assurance; PMP is simple, self-regulating, and does not require significant communications or bandwidth overhead. In this paper, we develop an analytic model for PMP. We first assume that the network service provider is a single constrained monopolist and users must participate in the network; we model the resultant consumer behavior and the provider’s profit. We then relax the restriction that users must join the network, allowing them to opt-out, and derive the critical QoS thresholds for a profit-maximizing service provider. Our results show that PMP in a single-provider scenario can be profitable to the provider, both when users must use the system and when they may opt out.