The membership fee increases over time with the network size

Gila E. Fruchter

Research output: Contribution to journalArticlepeer-review


We study the dynamic pricing decisions for monopolistic network service providers. We assume that the firm follows a two-part pricing scheme, which consists of an ongoing membership fee, and a usage fee for communications within the network. We study the firms’ problems as an optimal control problem and establish the optimal pricing policy. It’s demonstrated that in the two-part tariff pricing strategy, the membership fee always increases over time with the increase in the network size. These results are particularly useful for managers.

Original languageEnglish
Pages (from-to)84-86
Number of pages3
JournalInnovative Marketing
Issue number3
StatePublished - 2009

Bibliographical note

Publisher Copyright:
© Gila E. Fruchter, 2009.


  • Network services
  • Optimal control
  • Optimal pricing
  • Two-part tariff


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