Capacity Management in Decentralized Networks

Yasushi Masuda () and Seungjin Whang ()
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Yasushi Masuda: Faculty of Science and Technology, Keio University, Yokohama, Kanagawa, 223-8522, Japan
Seungjin Whang: Graduate School of Business, Stanford University, Stanford, California 94305

Management Science, 2002, vol. 48, issue 12, 1628-1634

Abstract: Bottleneck analysis is a useful tool in capacity planning for centrally controlled network systems. However, under a decentralized network where individual users are allowed to select their own routes, straightforward application of bottleneck analysis does not necessarily yield an optimal performance. It may even hurt the system performanceÔan aspect of Braess's paradox. We investigate the capacity expansion problem for a decentralized system with general network topology. To this end, we first discuss the short-run problem and show that the externality pricing solves the joint problem of demand and routing control. We then study the capacity expansion/reduction problem for decentralized systems that may or may not be optimally controlled in the short run.

Keywords: bottleneck analysis; braess's paradox; nash equilibrium; externality pricing; queueing network (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (5)

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