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Strategic Pricing in Next-hop Routing with Elastic Elliot Anshelevich

Summary: Strategic Pricing in Next-hop Routing with Elastic
Elliot Anshelevich
Ameya Hate
Koushik Kar
We consider a model of next-hop routing by self-interested agents. In this model,
nodes in a graph (representing ISPs, Autonomous Systems, etc.) make pricing decisions
of how much to charge for forwarding traffic from each of their upstream neighbors,
and routing decisions of which downstream neighbors to forward traffic to (i.e., choos-
ing the next hop). Traffic originates at a subset of these nodes that derive a utility
when the traffic is routed to its destination node; the traffic demand is elastic and the
utility derived from it can be different for different source nodes. Our next-hop rout-
ing and pricing model is in sharp contrast with the more common source routing and
pricing models, in which the source of traffic determines the entire route from source
to destination. For our model, we begin by showing sufficient conditions for prices to
result in a Nash equilibrium, and in fact give an efficient algorithm to compute a Nash
equilibrium which is as good as the centralized optimum, thus proving that the price
of stability is 1. When only a single source node exists, then the price of anarchy is
1 as well, as long as some minor assumptions on player behavior is made. The above


Source: Anshelevich, Elliot - Department of Computer Science, Rensselaer Polytechnic Institute


Collections: Computer Technologies and Information Sciences