Coalitionally stable pricing schemes for inter-domain forwarding

In this work, we model and analyze the problem of stable and efficient pricing for inter-domain traffic routing in the future Internet. We consider a general network topology with multiple sources and sinks of traffic, organized into separate domains managed by Internet Service Providers (ISPs) solely interested in maximizing their own profit. In this framework, we prove that there exists a pricing scheme that attains network-wide efficiency and is yet coalitionally stable, where the coalitions correspond to the ISPs that are acting in self-interest. This implies that this pricing scheme not only maximizes the overall utility of the resulting traffic flows, but is also such that ISPs cannot expect to improve their profit through deviation from it, even if multiple ISPs deviate at the same time. Through simulations on scale-free preferential attachment network topology models as well as actual inter-domain topologies obtained from the CAIDA database, we evaluate the convergence of best-response based simple price updates, and show that they quickly attain near-optimal network utility in these network topologies.