A pricing policy for a computer facility with congestion externalities

The paper proposes an adaptive pricing mechanism which allocates computer resources among the different consumers in an economically efficient manner. Users are charged a unit price designed to reflect the marginal congestion load each imposes upon the system. Some of the more common allocation schemes are described briefly followed by a discussion of the desirable properties of an efficient allocative system. These properties are incorporated into a model of a computer facility, and a number of propositions regarding the behavior of this model are proposed. In order to test empirically the behavior of this system under conditions approximating those which would prevail in an actual computer center, the pricing mechanism was analyzed by a simulation model of a computer center, using data obtained from a survey of customers at the computer center of a university (Technion, Israel Institute of Technology at Haifa, Israel). A few suggestions regarding the implementation of the proposed pricing policy conclude the paper.