Pricing Virtual Private Networks — An Economic, Engineering and Experimental Approach

This chapter presents a network traffic-pricing model for virtual private network (VPN) deployed on packet-switching networks. A transaction-level pricing architecture based on proxy server technology is proposed for the implementation. Analytical expressions of pricing formulas for first-in-first-out and round-robin bandwidth are derived. Both agent-based simulations and the human subject based direct experiment have been conducted using real-time test data. The experimental outcomes strongly support that the pricing mechanism can effectively improve a VPN’s transmission efficiency measured by the service welfare rate.