Auction or Tâtonnement - Finding Congestion Prices for Adaptive Applications

In earlier work, we had proposed a pricing model in which service prices are based on QoS (resources consumed) and longterm user demand, and also have a congestion-sensitive component to motivate rate and service adaptation by applications with elastic demand. The network is provisioned to provide multiple services, with short-term, dynamic configuration of network resources. Congestion pricing schemes in the network literature fall into two basic categories: tâtonnement1 and bandwidth auctions. As far as we know, there has been no work comparing these two schemes in the same environment. The goal of this paper is to develop pricing schemes based on the above two approaches, in an environment with short-term resource allocation and demand adaptation. We address some important practical issues related to making the schemes work in such an environment. We compare the tâtonnementand auctionbased schemes with respect to network utilization, connection blocking rate, user satisfaction and network revenue, and draw some general conclusions about the relative benefits of the two approaches.