A study of bilateral settlement game for differentiated qualitative services networks

For providing end-to-end differentiated service, networks service providers need to interconnect with other service provider and hence such interconnection brings settle problems. Based on the differentiated service network architecture, the new challenges of the settlement problem are how to model the user´s demand function and how to allocate the bandwidth resources between inter-domain and intra-domain users. The bandwidth allocation problem becomes more complicated. This paper formulates the settlement problem as a multi-stage game with incomplete information and develops a two-stage solution. In the first stage, we obtain the capacity of Internet bandwidth and the expected total profit by using sequential quadratic programming (SQP) method. In the second stage, continuing the statement regards as the adjustment method of settlement rate. According to the non-linearity and non-convexity of the objective function, we observe there are many Nash equilibrium points in the system. Therefore, the solution to the problem is not unique. Numerical analysis shows that ISP will judge the marginal profit from users and the other interconnected service provider to determine the bandwidth allocation.