Pricing Differential Services: A Game-Theoretic Approach

The goal of this paper is to study pricing of differential services and its impact on the choice of service priority at equilibrium. We consider both TCP connections as well as non controlled (real time) connections. The performance measures (such as through-put and loss rates) are determined according to the operational parameters of a RED buffer management. The latter is assumed to be able to give differentated services to the applications according to their choice of service class. We consider a best effort type of service differentiation for both TCP as well as real-time traffic where the QoS of connections is not guaranteed, but by choosing a better (more expensive) service class, the QoS parameters of a session can improve (as long as the service class of other sessions are fixed). The choice of a service class of an application will depend both on the utility as well as on the cost it has to pay. We first study the performance of the system as a function of the connections'parameters and their choice of service classes. We then study the decision problem of how to choose the service classes. We model the problem as a noncooperative game. We etablish conditions for an equilibrium to exist and to be uniquely defined. We further provide conditions for convergence to equilibrium from non equilibria initial states. We finally study the pricing problem of how to choose prices so that the resulting equilibrium would maximize the network benefit.