Market Design for Capacity Sharing in Networks

Saurabh Amin, Patrick Jaillet, Haripriya Pulyassary and Manxi Wu

Papers from arXiv.org

Abstract: We study a market mechanism that sets edge prices to incentivize strategic agents to efficiently share limited network capacity. In this market, agents form coalitions, with each coalition sharing a unit capacity of a selected route and making payments to cover edge prices. Our focus is on the existence and computation of market equilibrium, where challenges arise from the interdependence between coalition formation among strategic agents with heterogeneous preferences and route selection that induces a network flow under integral capacity constraints. To address this interplay between coalition formation and network capacity utilization, we introduce a novel approach based on combinatorial auction theory and network flow theory. We establish sufficient conditions on the network topology and agents' preferences that guarantee both the existence and polynomial-time computation of a market equilibrium. Additionally, we identify a particular market equilibrium that maximizes utilities for all agents and is equivalent to the classical Vickrey-Clarke-Groves mechanism. Furthermore, we extend our results to multi-period settings and general networks, showing that when the sufficient conditions are not met, an equilibrium may still exist but requires more complex, path-based pricing mechanisms that set differentiated prices based on agents' preference parameters.

Date: 2023-07, Revised 2024-11
New Economics Papers: this item is included in nep-cta, nep-des, nep-mic, nep-net and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in WINE 2024 The 20th Conference on Web and Internet Economics (WINE 2024)

Downloads: (external link)
http://arxiv.org/pdf/2307.03994 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2307.03994

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().