Optimal multi-layered congestion based pricing schemes for enhanced QoS

Pricing is an effective tool to control congestion and achieve quality of service (QoS) provisioning for multiple differentiated levels of service. In this paper, we consider the problem of pricing for congestion control in the case of a network of nodes under a single service class and multiple queues. We present a closed-loop multi-layered pricing scheme and propose an algorithm for finding the optimal state dependent price levels for individual queues, at each node. This is different from most adaptive pricing schemes in the literature that do not obtain a closed-loop state dependent pricing policy. The method that we propose finds optimal price levels that are a function of the queue lengths at individual queues. Further, we also propose a variant of the above scheme that assigns prices to incoming customers at each node according to a weighted average queue length at that node. This is done to reduce frequent price variations and is in the spirit of the random early detection (RED) mechanism used in TCP/IP networks. Koteswara Rao Vemu is with the Department of Computer Science and Automation, Indian Institute of Science, Bangalore 560012, India. [email protected] Shalabh Bhatnagar is with the Department of Computer Science and Automation, Indian Institute of Science, Bangalore 560012, India. [email protected]. Corresponding author N.Hemachandra is with the Department of Industrial Engineering and Operations Research, Indian Institute of Technology Bombay, Mumbai, 400 076, India. [email protected]