Congestion charges and a capacity sharing game

Frank Kelly

In this talk we discuss a method for the sharing of bandwidth among users of a communication network. The method can be employed either when a network owner wishes to sell bandwidth for a specified period of time to a number of different users, or when users cooperate to build a network to be shared among themselves. We show how a Contract and Balancing Process can be defined to mediate between rapidly fluctuating prices and the longer time scales over which bandwidth contracts might be traded. An important property of the process is that it avoids introducing perverse incentives for a capacity owner to increase congestion.

We discuss the existence and form of Nash equilibria for players' choices of capacity using a framework in which the players each begin by buying some capacity at the first stage, then the traffic eventuates and finally payments are made to other players as a result of the balancing process. In many cases the choice of capacity at the equilibrium will be close to the predicted traffic demand at the anticipated price.

Joint work with Edward Anderson and Richard Steinberg