A game theoretic framework for joint routing and pricing in networks with elastic demands

Abstract

In this paper, we study the economic interactions between network users and providers. Each user must ship his traffic from a source to a destination node, splitting it over multiple paths, each owned by an independent network provider. Users are charged a fixed price per unit of bandwidth used, and face both access and transport costs. The transmission rate of each user is assumed to be function of network congestion (like for TCP traffic) and the price per bandwidth unit. Network providers compete among themselves to cover network users, and set transport prices to maximize their revenue. We provide sufficient conditions for the existence and the uniqueness of the Nash equilibrium under a variety of cost functions, and we derive optimal price and routing settings. Finally, we analyze and discuss several numerical examples that provide insights into the models' solution. Copyright © 2009 ICST.