An Algorithm for Optimal Service Provisioning using Resource Pricing

W e propose a microeconomic approach to service provisioning in ATM networks. Our provisioning procedure consists of two algorithms, one executed by the network and the other by individual users. The network offers directly for rent its bandwidth and buffers. Users purchase freely resources to meet their desired quality based on their own trafic parameters and delay requirements. The network periodically adjusts resource prices based on user requests monitored in the previous period. W e describe network’s adjustment scheme and users’ decision rule, and show that under the proposed price adjustment scheme, in order to minimize their own service cost, individual users will indeed request amounts of resources that optimize a measure of overall network performance. Since our approach does not require the network to know user trafic and delay parameters, it does not mandate traffic policing on the part of the network.