Equilibrium Bandwidth and Buuer Allocations for Elastic Traacs

| Consider a set of users sharing a network node under an allocation scheme that provides each user with a xed minimum and a random extra amount of bandwidth and buuer. Allocations and prices are adjusted to adapt to resource availability and user demands. Equilibrium is achieved when all users optimize their utility and demand equals supply for non-free resources. We analyze two models of user behavior. We show that at equilibrium expected return on purchasing variable resources can be higher than that on xed resources. Thus users must balance the marginal increase in utility due to higher return on variable resources and the marginal decrease in utility due to their variability. For the rst user model we further show that at equilibrium where such tradeoo is optimized all users hold strictly positive amounts of variable bandwidth and buuer. For the second model we show that if both variable bandwidth and buuer are scarce then at equilibrium every user either holds both variable resources or none.