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Congestion Pricing and Noncooperative Games in Communication Networks

Author

Listed:
  • Ayalvadi Ganesh

    (Microsoft Research, 7 J. J. Thompson Avenue, Cambridge CB3 0FB, United Kingdom)

  • Koenraad Laevens

    (SMACS Research Group, Ghent University, Sint-Pietersnieuwstraat 41, B-9000 Ghent, Belgium)

  • Richard Steinberg

    (Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom)

Abstract

We consider congestion pricing as a mechanism for sharing bandwidth in communication networks, and model the interaction among the users as a game. We propose a decentralized algorithm for the users that is based on the history of the price process, where user response to congestion prices is analogous to “fictitious play” in game theory, and show that this results in convergence to the unique Wardrop equilibrium. We further show that the Wardrop equilibrium coincides with the welfare-maximizing capacity allocation.

Suggested Citation

  • Ayalvadi Ganesh & Koenraad Laevens & Richard Steinberg, 2007. "Congestion Pricing and Noncooperative Games in Communication Networks," Operations Research, INFORMS, vol. 55(3), pages 430-438, June.
    • Handle: RePEc:inm:oropre:v:55:y:2007:i:3:p:430-438
    DOI: 10.1287/opre.1070.0400
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    References listed on IDEAS

    as
    1. Edward Anderson & Frank Kelly & Richard Steinberg, 2006. "A Contract and Balancing Mechanism for Sharing Capacity in a Communication Network," Management Science, INFORMS, vol. 52(1), pages 39-53, January.
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    Cited by:

    1. Alok Gupta & Boris Jukic & Dale O. Stahl & Andrew B. Whinston, 2011. "An Analysis of Incentives for Network Infrastructure Investment Under Different Pricing Strategies," Information Systems Research, INFORMS, vol. 22(2), pages 215-232, June.
    2. Zhixin Liu, 2012. "Equilibrium analysis of capacity allocation with demand competition," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(3‐4), pages 254-265, April.
    3. Chia-Wei Kuo & Kwei-Long Huang & Chao-Lung Yang, 2017. "Optimal contract design for cloud computing service with resource service guarantee," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(9), pages 1030-1044, September.
    4. Ma, Xiaoyu & Huang, Feiteng & Li, Xue & Zhang, Jihong, 2024. "Optimal contract design in mobile service industry considering network congestion," International Journal of Production Economics, Elsevier, vol. 267(C).

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