Pricing Centralized and Decentralized Wireless Service: A Mechanism Design Approach

This study concentrates on how to price wireless access service and compare the two different operation models: centralized and decentralized service architecture. With the classical model of the mechanism design, some interesting results are discovered. In the mechanism design, a tele- communication service provider offers two service plans, and assumes that consumers select their service plans according to individual type. By involving queuing delay and service availability in our study, we find that the results in centralized service architecture are consistent with those in prior studies in the mechanism design; however, the results in decentralized service architecture are contrary to those. The phenomenon is caused by the factor that the level of service benefit in decentralized service architecture is positively associated with the number of contributors. Also, we examine social welfare in centralized service architecture and indicate that the government has to understand the real benefits received by different group of consumers if a subsidy is provided.