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These results are intuitive. The monopolist will charge the lowest price to the market segment that has the greatest demand elasticity. In Figure 6.5 there are two customers classes, with demand functions x1 . p/ D 6 3 p and x2 . p/ D 2 2 p. The solution to (6.3) with the right hand side equal to 1=2 is p1 D 5=4 and p2 D 3=4, with x1 D 9=2 and x2 D 1=4. At these points, 1 D 5=3, 2 D 3. The market segment that is most price inelastic will be charged the highest price. Similar results hold when the markets are not independent and prices in uence demand across markets. A simple but clever way to implement group pricing is through discount coupons. The service is offered at a discount price to customers with coupons. It is time consuming to collect coupons. One class of customers is prepared to put in the time and another is not. The customers are effectively divided into two groups by their price elasticity. Those with a greater price elasticity will collect coupons and end up paying a lower price. It is interesting to ask whether or not the overall economy bene ts from third degree price discrimination. The answer is that it can go either way. Price discrimination can only take place if different consumers have unequal marginal utilities at their levels of consumption,

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packet conforms to the traf c contract If it does not, then the node takes an appropriate policing action It might discard the packet, or give it a lower quality service In some cases, if a packet is to be discarded, then a larger block of packets may also be discarded, since losing one packet makes all information within its context obsolete For instance, consider Internet over ATM An Internet packet consists of many cells If a packet is transmitted and even just one cell from the packet is lost, then the whole packet will be resent Thus, the network could discard all the cells in the packet, rather than waste effort in sending those useless cells This is called selective cell discard A crucial decision that a network node must take on a per packet basis is where to forward an incoming packet.

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In a connectionless network, the decision is based on the destination of the packet through the use of a routing table Packets include network-speci c information in their header, such as source and destination addresses In the simplest case of a router or packet switch the routing table determines the node that should next handle the packet simply from the packet s destination In a connection-oriented network, the packets of a given connection ow through a path that is pre-set for the connection Each packet s header contains a label identifying the connection responsible for it The routing function of the network de nes the path This is called virtual circuit switching, or simply switching More details are given in Section 314 Forwarding in a connection-oriented network is simpler than in a connectionless one, since there are usually fewer active connections than possible destinations.

(4.58)

Conditions based on values of attributes of object instances in the repository: The policy repository will contain not only policies (the policy information model), but also object instances representing information about the system being modeled and operated upon (the device information model). For example, in an MPLS traf c engineering scenario, the repository would contain object instances representing traf c trunks, LSPs, and associations between a traf c trunk and its currently assigned LSP and its backup LSPs, if any. Policy conditions could then be formed that express a condition in terms of the attributes of these object instances for example, LSP bandwidth > 10 Mbps.

The network as a whole has responsibility for deciding how to set routing tables and to construct and tear down paths for connections These decisions are taken on the basis of a complete picture of the state of the network and so are rather slow to change Network management is responsible for setting and updating this information An important way to increase revenue may be to provide different qualities of service at different prices So in addition to making routing decisions, network nodes must also decide how to treat packets from different connections and so provide ows with different qualities of packet delay and loss All these decisions must be taken for each arriving packet The time available is extremely short; in fact, it is inversely proportional to the speed of the links.

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