ABSTRACT
Internet network-access pricing remains a controversial issue that is of concern to government regulators, consumers, and ISPs, given the growing prevalence of the Internet in daily transactions around the world. This chapter (1) develops model of network-access pricing, which reduces or can reduce the information producers’ losses from copyright infringement and improves social welfare and the efficiency of computer networks; (2) develops optimal conditions for such pricing scheme, which will incorporate the effects of congestion, social welfare, copyright infringements, evolution of networks, and variations in usage; and (3) analyzes some of the main pricing issues and illustrates how the present mispricing of Internet access contributes to network congestion and illegal online file sharing (IOF). The models developed in this chapter are also applicable to providers of virtual private networks in various industries such as consumer health care, financial services, education, entertainment, etc.
