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Capacity Management in Decentralized Networks

Author

Listed:
  • Yasushi Masuda

    (Faculty of Science and Technology, Keio University, Yokohama, Kanagawa, 223-8522, Japan)

  • Seungjin Whang

    (Graduate School of Business, Stanford University, Stanford, California 94305)

Abstract

Bottleneck analysis is a useful tool in capacity planning for centrally controlled network systems. However, under a decentralized network where individual users are allowed to select their own routes, straightforward application of bottleneck analysis does not necessarily yield an optimal performance. It may even hurt the system performanceÔan aspect of Braess's paradox. We investigate the capacity expansion problem for a decentralized system with general network topology. To this end, we first discuss the short-run problem and show that the externality pricing solves the joint problem of demand and routing control. We then study the capacity expansion/reduction problem for decentralized systems that may or may not be optimally controlled in the short run.

Suggested Citation

  • Yasushi Masuda & Seungjin Whang, 2002. "Capacity Management in Decentralized Networks," Management Science, INFORMS, vol. 48(12), pages 1628-1634, December.
    • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:12:p:1628-1634
    DOI: 10.1287/mnsc.48.12.1628.446
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    References listed on IDEAS

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    1. Yasushi Masuda & Seungjin Whang, 1999. "Dynamic Pricing for Network Service: Equilibrium and Stability," Management Science, INFORMS, vol. 45(6), pages 857-869, June.
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    Cited by:

    1. Yezekael Hayel & Mohamed Ouarraou & Bruno Tuffin, 2007. "Optimal Measurement-based Pricing for an M/M/1 Queue," Networks and Spatial Economics, Springer, vol. 7(2), pages 177-195, June.
    2. Zhang, Jiayuan & Yalcin, Mehmet G. & Hales, Douglas N., 2021. "Elements of paradoxes in supply chain management literature: A systematic literature review," International Journal of Production Economics, Elsevier, vol. 232(C).
    3. Dulluri, Sandeep & Raghavan, N.R. Srinivasa, 2008. "Collaboration in tool development and capacity investments in high technology manufacturing networks," European Journal of Operational Research, Elsevier, vol. 187(3), pages 962-977, June.
    4. Yasushi Masuda & Akira Tsuji, 2019. "Congestion Control for a System with Parallel Stations and Homogeneous Customers Using Priority Passes," Networks and Spatial Economics, Springer, vol. 19(1), pages 293-318, March.

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