Skip to main content

Economic Models of Communication Networks

  • Chapter
Performance Modeling and Engineering

Standard performance evaluations of communication networks focus on the technology layer where protocols define precise rules of operations. Those studies assume a model of network utilization and of network characteristics and derive performance measures. However, performance affects how users utilize the network. Also, investments by network providers affect performance and consequently network utilization. We call the actions of users and network providers the “economic layer” of the network because their decisions depend largely on economic incentives. The economic and technology layers interact in a complex way and they should be studied together. This tutorial explores economic models of networks that combine the economic and technology layers.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. D. Acemoglu and A. Ozdaglar, “Competition and Efficiency in Congested Markets,” Mathematics of Operations Research, vol. 32, no. 1, pp. 1–31, February 2007.

    Article  MATH  MathSciNet  Google Scholar 

  2. G. Akerlof, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 84 (3): 488–500, 1970.

    Article  Google Scholar 

  3. E. Altman, T. Boulogne, R. El Azouzi and T. Jimenez, “A survey on networking games in telecommunications,” Computers & Operations Research, 33, 286–311, 2006.

    Article  MATH  MathSciNet  Google Scholar 

  4. V. Anantharam, “On the Nash dynamics of congestion games with player-specific utility,” Proc. 2004 43rd IEEE Conf. on Decision and Control, 2004.

    Google Scholar 

  5. R. Anderson and T. Moore, “The Economics of Information Security: A Survey and Open Questions,” Fourth bi-annual Conference on the Economics of the Software and Internet Industries, Toulouse, 1/2007; http://www.cl.cam.ac.uk/ rja14/Papers/toulouse-summary.pdf

  6. T. Basar and G.J. Olsder, Dynamic Noncooperative Game Theory, Second edition, SIAM, 1999.

    Google Scholar 

  7. D. Bertsekas, A. Nedic and A. Ozdaglar, Convex Analysis and Optimization, Athena Scientific, Cambridge, Massachusetts, 2003.

    MATH  Google Scholar 

  8. S. Boyd and L. Vandenberghe, Convex Optimization, Cambridge University Press, 2004.

    Google Scholar 

  9. C.W. Cobb and P.H. Douglas “A Theory of Production,” American Economic Review, 18 (Supplement), 139–165, 1928.

    Google Scholar 

  10. C. Courcoubetis and R. Weber, The Pricing of Communications Services, J. Wiley, 2002.

    Google Scholar 

  11. C. Courcoubetis, M.P. Dramitinos and G.D. Stamoulis, “An auction mechanism for bandwidth allocation over paths,” ITC-17, Salvador da Bahia, Brazil, 2001.

    Google Scholar 

  12. D. Farber and M. Katz. “Hold Off On Net Neutrality,” Washington Post, 1/22/2007; http://www.washingtonpost.com/wp- dyn/content/article/2007/01/18/AR2007011801508.html

  13. E. Felten, “The Nuts and Bolts of Network Neutrality,” Princeton, 2006; http://itpolicy.princeton.edu/pub/neutrality.pdf.

  14. D. Fudenberg and J. Tirole, Game Theory, MIT Press, 1991.

    Google Scholar 

  15. R. Gibbons, Game Theory for Applied Economists, Princeton University Press, 1992.

    Google Scholar 

  16. G. Hardin, “The Tragedy of the Commons,” Science, 162: 1243–1248, 1968.

    Article  Google Scholar 

  17. L. He and J. Walrand, Pricing and Revenue Sharing Strategies for Internet Service Providers, IEEE JSAC, May 2006.

    Google Scholar 

  18. N. Hedge, A. Proutiere, and J. Roberts, “Evaluating the voice capacity of 802.11 WLAN under distributed control,” Proc. LANMAN, 2005.

    Google Scholar 

  19. R. Jain, “An Efficient Nash-Implementation Mechanism for Allocating Arbitrary Bundles of Divisible Resources,” IEEE JSAC, 2007.

    Google Scholar 

  20. R. Jain and P. Varaiya, “Combinatorial Exchange Mechanisms for Efficient Bandwidth Allocation,” Communications in Information and Systems, 3, no. 4, 305–324, 2004.

    MathSciNet  Google Scholar 

  21. R. Jain, A. Dimakis and J. Walrand, “Mechanisms for efficient allocation in divisible capacity networks,” Proc. Control and Decision Conference (CDC), December 2006.

    Google Scholar 

  22. R. Johari and J.N. Tsitsiklis, “Efficiency loss in a resource allocation game,” Mathematics of Operations Research, 29(3): 407–435, 2004.

    Article  MATH  MathSciNet  Google Scholar 

  23. F.P. Kelly, “Charging and rate control for elastic traffic,” European Trans. on Telecommunications, 8(1): 33–37, 1996.

    Google Scholar 

  24. E. Koutsoupias and C. Papadimitriou, “Worst-case equilibria,” Proc. Symp. on Theoretical Aspects of Computer Science, 16: 404–413, 1999.

    MathSciNet  Google Scholar 

  25. V. Krishna, Auction Theory, Academic Press, 2002.

    Google Scholar 

  26. R.J. La and V. Anantharam, “Network pricing using a game theoretic approach,” Proc. Conf. on Decision and Control, 1999.

    Google Scholar 

  27. A. Lazar and N. Semret, “The progressive second price auction mechanism for network resource sharing,” Proc. Int. Symp. on Dynamic Games and Applications, 1997.

    Google Scholar 

  28. A. Lazar and N. Semret, “Design and analysis of the progressive second price auction for network bandwidth sharing,” Telecommunication Systems - Special issue on Network Economics, 1999.

    Google Scholar 

  29. L. Jiang, V. Anantharam, and J. Walrand, “Efficiency of selfish investment in network security,” preprint, security.pdf

    Google Scholar 

  30. L. Jiang and J. Walrand, “Congestion Pricing of Network Access,” preprint, 2008; http://robotics.eecs.berkeley.edu/~wlr/Papers/libin-pricing.pdf

  31. R. Maheswaran and T. Basar, “Nash equilibrium and decentralized negotiation in auctioning divisible resources,” J. Group Decision and Negotiation 12:361–395, 2003.

    Article  Google Scholar 

  32. R. Maheswaran and T. Basar, “Social Welfare of Selfish Agents: Motivating Efficiency for Divisible Resources,” CDC, 2004.

    Google Scholar 

  33. J.K. Mackie-Mason and H.R. Varian, “Generalized Vickrey Auctions,” 1994; citeseer.ist.psu.edu/mackie-mason94generalized.html

    Google Scholar 

  34. D. Monderer and L.S. Shapley, “Potential Games,” Games and Economic Behavior, 14, 124–143, 1996.

    Article  MATH  MathSciNet  Google Scholar 

  35. J. Musacchio and J. Walrand, WiFi Access Point Pricing as a Dynamic Game, IEEE/ACM Transactions on Networking, vol.14, no.2, April 2006, pp. 289-301.

    Article  Google Scholar 

  36. J. Musacchio, G. Schwartz, and J. Walrand, “A Two-Sided Market Analysis of Provider Investment Incentives with an Application to the Net-Neutrality Issue: Long Version,” September 2007; http://robotics.eecs.berkeley.edu/~wlr/Papers/MSW-Long.pdf

  37. R.B. Myerson, Game Theory: Analysis of Conflict, Harvard University Press, 1997.

    Google Scholar 

  38. R.B. Myerson and M.A. Satterthwaite, “Efficient mechanisms for bilateral trading,” J. of Economic Theory 28: 265–281, 1983.

    Article  MathSciNet  Google Scholar 

  39. A. Odlyzko, “Paris Metro Pricing for the Internet,” ACM Conference on Electronic Commerce, 1998.

    Google Scholar 

  40. M.J. Osbourne and A. Rubinstein, Acourseingametheory, MIT Press, 1994.

    Google Scholar 

  41. A. Ozdaglar and R. Srikant, Incentives and Pricing in Communication Networks, chapter in Algorithmic Game Theory, Noam Nisan, Tim Roughgarden, Eva Tardos, and Vijay Vazirani (Editors), Cambridge University Press, 2007.

    Google Scholar 

  42. G. Owen, Game Theory, Third edition, Academic Press, 1995.

    Google Scholar 

  43. C.H. Papadimitriou, “Algorithms, games, and the internet,” Proc. STOCS, 2001.

    Google Scholar 

  44. R.W. Rosenthal, “A class of games possessing pure-strategy Nash equilibria,” International Journal of Game Theory, 2, 6567, 1973.

    Article  Google Scholar 

  45. T. Roughraden and E. Tardos, “How bad is selfish routing?” Proceedings of the 41st Annual Symposium on Foundations of Computer Science, 2000.

    Google Scholar 

  46. S. Sanghavi and B. Hajek, “A new mechanism for the free-rider problem,” IEEE Transactions on Automatic Control, to appear March 2008.

    Google Scholar 

  47. J. Shu and P. Varaiya, “Smart pay access control via incentive alignment,” IEEE JSAC, 24(5): 1051–1060, May 2006.

    Google Scholar 

  48. H. Varian, “System Reliability and Free Riding,” Proceedings of ICEC 2003, 355–366, ACM Press 2003.

    Google Scholar 

  49. H. Varian, J. Farrell and C. Shapiro, The Economics of Information Technology: An Introduction, Cambridge University Press, 2004.

    Google Scholar 

  50. W. Vickrey, “Counterspeculation, Auctions, and Competitive Sealed Tenders,” Journal of Finance, XVI, 8–37, 1961.

    Article  Google Scholar 

  51. J. von Neumann and O. Morgenstern, Theory of Games and Economic Behavior, Princeton University Press, 1953.

    Google Scholar 

  52. J.G. Wardrop, “Some theoretical aspects of road traffic research,” Proceedings of the Institute of Civil Engineers, vol. 1, pp. 325–378, 1952.

    Google Scholar 

  53. H. Yaiche, R.R. Mazumdar and C. Rosenberg, “A game theoretic framework for bandwidth allocation and pricing in broadband networks,” IEEE/ACM Trans. on Networking 8(5): 667–678, 2000.

    Article  Google Scholar 

  54. S. Yang and B. Hajek, “VCG-Kelly mechanisms for allocation of divisible goods: Adapting VCG mechanisms to one-dimensional signals,” IEEE JSAC (Issue on noncooperative behavior in networks), vol. 25, pp. 1237–1243, 2007.

    Google Scholar 

  55. C.S. Yoo, “Network Neutrality and the Economics of Congestion,” Georgetown Law Journal, Vol. 94, June 2006.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2008 Springer Science+Business Media, LLC

About this chapter

Cite this chapter

Walrand, J. (2008). Economic Models of Communication Networks. In: Liu, Z., Xia, C.H. (eds) Performance Modeling and Engineering. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-79361-0_3

Download citation

  • DOI: https://doi.org/10.1007/978-0-387-79361-0_3

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-0-387-79360-3

  • Online ISBN: 978-0-387-79361-0

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics