The Use of Efficient Cost Allocation Mechanisms for Congestion Pricing in Data Networks with Priority Service Models

Abstract

This paper demonstrates the application of two efficient cost allocation mechanisms on a simple FIFO network model in order to find congestion-based prices for network access services. It is shown that it is possible to obtain congestion-dependent prices in data networks (such as the Internet), establishing simultaneously different service quality levels among the users. The rationale behind these efficient distribution mechanisms is an axiomatic framework that determines a set of basic principles, highlighting the need for a fair allocation. Due to the characteristics of the price mechanisms and the possibilities of the parameter space in which these mechanisms might be applied, it is also shown that, in some cases, such mechanisms need additional weighting schemes in order to establish coherent differences among the service quality levels. In conclusion, even though the axiomatic framework guarantees efficient allocation, checking coherency in its use is left to the network manager.