The prospect of using market-based mechanisms for allocating information and computational resources presents many complicated, confusing, and sometimes contentious issues. Hal Varian and Jeffrey MacKie-Mason answer Some FAQs about Usage-Based Pricing. Their discussion is in the context of pricing the internet, but most of the concepts are applicable more generally.
In designing these mechanisms, we seek to maximize the value accruing to both providers and consumers participating in the UMDL. Our approach will be to provide an environment whereby the participants engage in transactions they deem mutually beneficial. This will include a general framework for negotiation of terms and delivery of information services, as well as a suite of specific protocols implementing some standard forms of agreement. We will evaluate alternate mechanisms according to allocation efficiency, equity, and computational and other transaction costs.
Comments or questions may be sent to: UMDL.INFO@umich.edu