We describe the basic economic theory of pricing a congestible resource such as an ftp server, a router, a Web site, etc. In particular, we examine the implications of "congestion pricing" as a way to encourage efficient use of network resources. We explore the implications of flat pricing and congestion pricing for capacity expansion in centrally planned, competitive, and monopolistic environments.
Center for Research on Economic and Social Theory, Department of Economics, University of Michigan
http://deepblue.lib.umich.edu/bitstream/2027.42/100874/1/ECON327.pdf