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| Author: | Westland, J.C. |
| Title: | Congestion and network externalities in the short run pricing of information system services |
| Journal: | Management Science
1992 : JUL, VOL. 38:7, p.992-1009 |
| Index terms: | NETWORK ANALYSIS INFORMATION SYSTEMS COMPUTER SERVICES PRICING COMPUTER USERS |
| Language: | eng |
| Abstract: | Two types of externalities are significant in information systems: congestion externalities decrease and network externalities increase the utility of services. A complete model is presented for computing optimal transfer price which corrects several existing problems in information system service valuation. To balance the budget with a minimum of disutility to end users, management must resort to second-best pricing. Where congestion effects are highly nonlinear, they may effectively shut down the system. The models provided will allow management to take advantage of several alternatives suggested to solve congestion problems. |
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