A game theoretic framework for bandwidth allocation and pricing in broadband networks

In this paper, we present a game theoretic framework for bandwidth allocation for elastic services in high-speed networks. The framework is based on the idea of the Nash bargaining solution from cooperative game theory, which not only provides the rate settings of users that are Pareto optimal from the point of view of the whole system, but are also consistent with the fairness axioms of game theory. We first consider the centralized problem and then show that this procedure can be decentralized so that greedy optimization by users yields the system optimal bandwidth allocations. We propose a distributed algorithm for implementing the optimal and fair bandwidth allocation and provide conditions for its convergence. The paper concludes with the pricing of elastic connections based on users' bandwidth requirements and users' budget. We show that the above bargaining framework can be used to characterize a rate allocation and a pricing policy which takes into account users' budget in a fair way and such that the total network revenue is maximized.