Application of game theory to the capacity allocation problems in Internet service providers markets

Abstract

In this paper the mathematical model of Internet Service Providers market is introduced. We assume that users' preferences are described in terms of the utility which reflects their willingness to pay. Each Internet Service Provider allocate his links' capacities among users to maximize his total profit. Users choose the Internet Service Provider which offers them the highest transmission rate. We model such a situation with game theoretical framework. This approach allows to examine in detail the interdependency between teletraffic market participants (network operators). We present an algorithm which enables finding all Nash equilibria of the proposed game. Introduced method is illustrated with a numerical example.