Congestion Pricing and Noncooperative Games in Communication Networks

  • Authors:

  • Ayalvadi Ganesh;Koenraad Laevens;Richard Steinberg

  • Affiliations:

  • Microsoft Research, 7 J. J. Thompson Avenue, Cambridge CB3 0FB, United Kingdom;SMACS Research Group, Ghent University, Sint-Pietersnieuwstraat 41, B-9000 Ghent, Belgium;Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom

  • Venue:
  • Operations Research
  • Year:
  • 2007

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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.