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Competition yields efficiency in load balancing games

Anselmi, Jonatha and Ayesta, Urtzi and Wierman, Adam (2011) Competition yields efficiency in load balancing games. Performance Evaluation, 68 (11). pp. 986-1001. ISSN 0166-5316.

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We study a nonatomic congestion game with N parallel links, with each link under the control of a profit maximizing provider. Within this ‘load balancing game’, each provider has the freedom to set a price, or toll, for access to the link and seeks to maximize its own profit. Given prices, a Wardrop equilibrium among users is assumed, under which users all choose paths of minimal and identical effective cost. Within this model we have oligopolistic price competition which, in equilibrium, gives rise to situations where neither providers nor users have incentives to adjust their prices or routes, respectively. In this context, we provide new results about the existence and efficiency of oligopolistic equilibria. Our main theorem shows that, when the number of providers is small, oligopolistic equilibria can be extremely inefficient; however as the number of providers N grows, the oligopolistic equilibria become increasingly efficient (at a rate of 1/N) and, as N→∞, the oligopolistic equilibrium matches the socially optimal allocation.

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Additional Information:© 2011 Elsevier B.V. Available online 2 August 2011. Research partially supported by grant MTM2010-17405 (Ministerio de Ciencia e Innovación, Spain), grant PI2010-2 (Department of Education and Research, Basque Government), and NSF CNS-0846025. The authors are very grateful to Olivier Brun, Balakrishna Prabhu and the anonymous reviewers for their insightful comments that significantly increased the quality of this paper.
Funding AgencyGrant Number
Ministerio de Ciencia e Innovaciόn (MICINN)MTM2010-17405
Department of Education and Resarch, Basque GovernmentPI2010-2
Subject Keywords:Queueing games; Oligopolistic price competition; Parallel providers; Price of anarchy
Issue or Number:11
Record Number:CaltechAUTHORS:20111128-101928328
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Official Citation:Jonatha Anselmi, Urtzi Ayesta, Adam Wierman, Competition yields efficiency in load balancing games, Performance Evaluation, Volume 68, Issue 11, November 2011, Pages 986-1001, ISSN 0166-5316, 10.1016/j.peva.2011.07.005. (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:27969
Deposited By: Ruth Sustaita
Deposited On:28 Nov 2011 18:50
Last Modified:29 Jul 2020 23:02

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