Pricing the Internet: The One-Component versus Two-Component Pricing Mechanism - An Evaluation

This paper investigates the efficiency of one-component pricing mechanisms versus twocomponent pricing mechanisms. The paper deals with four pricing mechanisms used in the Internet, namely, flat rate pricing, usage-based pricing, transaction-based pricing and version-based pricing for the analysis. The objective of the paper is to evaluate and analyse the ways in which the usage-based pricing mechanism is more efficient than one-component-based pricing and this evaluation has been made in accordance with the four examples cited. The paper observes the efficiency of the two-component pricing mechanism structure from both the sellers' and buyers' perspective and clears the way for further research in this area.

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