The improved model of incentive-pricing of internet schemes for Cobb-Douglas utility function by using LINGO 13.0

Abstract

Abstract In this paper, an improved model of the incentive-pricing scheme was designed. Previous research only shows the incentive model with the disadvantages of no considering the utility function to measure the satisfaction of the user. Then, the models are improved by deriving from the incorporation of bundling and reverse charging models obtained from previous studies, as well as taking into account the quality of service to users by using the Cobb-Douglas utility function. Optimal pricing schemes applied to the local data server, which is mail traffic data. The model used is the nonlinear optimization problem and solved by LINGO 13.0 to get the optimal solution. The results show that optimal results in the form of pricing schemes by applying flat fee, usage-based, and two-part tariff for homogeneous consumer’s schemes and the improved models show better performance in achieving the profit than the previous incentive pricing models.