Stable and efficient pricing for inter-domain traffic forwarding

We address the question of strategic pricing of inter-domain traffic forwarding services provided by ISPs, which is also closely coupled with the question of how ISPs route their traffic towards their neighboring ISPs. Posing this question as a non-cooperative game between neighboring ISPs, we study the properties of this pricing game in terms of the existence and efficiency of the equilibrium. We observe that for "well-provisioned" ISPs, Nash equilibrium prices exist and they result in flows that maximize the overall network utility (generalized end-to-end throughput). For general ISP topologies, equilibrium prices may not exist; however, simulations on a large number of realistic topologies show that best-response based simple price update solutions converge to stable and efficient prices and flows for most topologies.