Dynamic congestion-based pricing of bandwidth and buffer

We consider pricing of network resources in a reservation-based quality-of-service architecture. The pricing policy implements a distributed resource allocation to provide guaranteed bounds on packet loss and end-to-end delay for real-time applications. Distributed pricing roles are assigned to each user, each network node, and an arbitrager in between the user and the network. When delay constraints are not binding, we investigate two dynamic pricing algorithms using gradient projection and Newton´s method to update prices, and prove their convergence. We analyze the performance of the dynamic pricing policies and show that the gradient algorithm using Newton´s method converges more quickly and displays only a few small fluctuations. When delay constraints are binding, we investigate subgradient methods which can provide convergence to some range of the optimal allocation.