Using Generalized Second Price Auction for Congestion Pricing

To address network congestion issues, network providers are seeking to shape consumer´s usage behavior through economic incentives such as a tiered pricing scheme and/or restrictions on unlimited data plans. Current pricing schemes, however, do not ad- dress the congestion problem directly: the prices differentiation is based on the data volume consumed by the user in a month whereas the congestion is a consequence of the availability of limited bandwidth resources (consumption speed). Furthermore, users subscribing to a costlier plan receive no real- time (higher bandwidth) priority. This paper pro- poses an alternate pricing plan for wireless networks based on Generalized Second Price (GSP) auctions with the aim of improving welfare. Our simulation- based analysis reveals that such a pricing scheme allows users with higher willingness to pay to secure higher throughput of service, without significantly sacrificing the overall system throughput or fairness.