Simplification of network dynamics in large systems

Abstract

We show that when networks are large significant simplicity can be achieved for pricing-based control. We first consider a general loss network with Poisson arrivals and arbitrary holding time distributions. In dynamic pricing schemes, the network provider can charge different prices to the user according to the current utilization level of the network and also other factors. We show that when the system becomes large the performance (in terms of expected revenue) of an appropriately chosen static pricing scheme, whose price is independent of the current network utilization, will approach that of the optimal dynamic pricing scheme. Further, we show that under certain conditions, this static price is independent of the route that the flows take. We then extend the result to the case of dynamic routing, and show that the performance of an appropriately chosen static pricing scheme with bifurcation probability determined by average parameters can also approach that of the optimal dynamic routing scheme when the system is large. These results deepen our understanding of pricing-based network control. In particular, they provide us with the insight that, when the system is large, an appropriate pricing strategy based on the average network conditions (hence, slowly changing) can approach optimality.