Strategic Pricing in Next-Hop Routing with Elastic Demands
The authors 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., choosing 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.