The Progressive Second Price Auction Mechanism for Network Resource Sharing

In the emerging multiservice communication networks (ATM, Next-Generation Internet), traditional approaches to pricing are not viable. In telephony, the resources allocated to a call are xed, and usage prices are based on the predictability of the number of active calls at any given moment. But the wide and rapidly evolving range of applications (including some which adapt to resource availability) in the new networks makes demand much more di cult to predict. On the other hand , the current Internet practice of pricing by the physical capacity decouples actual use of resources from the monetary charges, making the network vulnerable to the well-known \tragedy of the commons". Thus there is a need to develop new approaches to pricing of network resources, which has led to much research in recent years (see [11, 8, 7, 3, 12, 9, 2] for a representative sample).