Market pricing of differentiated Internet services

Abstract

This paper presents a decentralized auction-based approach to pricing of edge-allocated bandwidth in a differentiated services model for the Internet. The players in this architecture are users, one raw-capacity seller per network and one broker per service per network. With the progressive second price auction mechanism as the basic building block, we conduct a game theoretic analysis, deriving optimal strategies for buyers and brokers, and show the existence of network-wide equilibria. We investigate the system dynamics by simulating a scenario with three interconnected networks, and two types of services built on the proposed standard expedited forwarding (EF) and assured forwarding (AF) per-hop-behaviors.