Utility function based-mixed integer nonlinear programming (MINLP) problem model of information service pricing schemes

Abstract

The development of the internet in this era of globalization has increased fast. The need for internet becomes unlimited. Utility functions as one of measurements in internet usage, were usually associated with a level of satisfaction that user get for the use of information services used specifically relating to maximize profits in achieving specific. There are three internet pricing scheme used, that is flat fee, usage based and two part tariff by applying pricing scheme Internet by using one of the utility function is Cobb-Douglass with monitoring cost and marginal cost. The internet pricing scheme will be solved by LINGO 13.0 in form of non-linear optimization problems to get optimal solution. internet pricing scheme by considering marginal and monitoring cost of Cobb Douglass utility function, the optimal solution is obtained using the either usage-based pricing scheme model or two-part tariff pricing scheme model for each services offered, if we compared with flat-fee pricing scheme. It is the best way for provider to offer network based on two part tariff scheme. The results show that by applying two-part tariff scheme, the providers can maximize its revenue either for homogeneous and heterogeneous consumers.