Pricing and revenue sharing in secondary market of mobile internet access

There is a fast growing number of public spaces offering Wi-Fi access to meet the rising demands for Internet access. It is common for such service to be offered to users at no charge or for a flat fee. Both situations provide very little incentive for Wi-Fi providers to offer better service to the users. Similarly, Wi-Fi providers pay a monthly flat rate to ISP for Internet access and, this too does not incentivize ISP to offer better service to Wi-Fi users. As a result, Wi-Fi users may experience poor connection when network becomes congested during peak hours. In this paper we propose a dynamic pricing scheme for Internet access and a revenue sharing mechanism that provides incentives for both ISP and Wi-Fi providers to offer better service to their users. We build our revenue sharing model based on Shapley value mechanism. Importantly, our proposed revenue sharing mechanism captures the power negotiation between ISP and Wi-Fi providers, and how shifts in power influences revenue division. Specifically, the model assures that the party who contributes more receives a higher portion of the revenue. In addition, our simulation demonstrates that our model captures the bargaining power shifts between Wi-Fi providers and ISP, and shows that the division of revenue asymptotically converges to a percentage value.