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This paper designs a bandwidth pricing mechanism that solves congestion problems in communication networks. The scheme is based on second-price auctions, which are known to be incentive compatible when a single indivisible item is to be sold (users have no interest to lie about the price they are willing to pay for the resource) and to lead to an efficient allocation of resources in the sense that it maximizes social welfare. The paper proves these properties when an infinitely divisible resource (bandwidth on a communication link) is to be shared among users who are allowed to submit several bids when they want to establish a connection.
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