A distributed auction-based algorithm to allocate bandwidth over paths

In the literature, Vickrey-Clark-Groves (VCG) double-sided auctions have been applied to inter-domain traffic exchange because they provide incentives to be truthful and lead to an efficient use of the network, among relevant properties of mechanism design. Unfortunately, the resulting resource allocation scheme is neither budget-balanced nor solvable in a decentralized way, two important properties. We present a different but more realistic auction-based algorithm for allocating bandwidth over paths to end users or ISPs, leading to a new budget-balanced pricing scheme for which allocations and charges can be computed in a decentralized way.