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The Progressive Second Price Mechanism in a Stochastic Environment

Author

Listed:
  • Patrick Maillé

    (ENST Bretagne)

  • Bruno Tuffin

    (IRISA–INRIA)

Abstract

We consider in this paper an auction-based pricing scheme recently introduced by Lazar and Semret to allocate bandwidth among users. This mechanism, called Progressive Second Price, was studied using tools from noncooperative game theory, for a fixed set of players (i.e., users). We compare here the results obtained in that case with the more realistic situation when players randomly enter or leave the game. We assume that they enter according to a Poisson process, and leave it after an exponentially distributed sojourn time. We show that this stochastic assumption cannot be skipped since it can lead to very different results.

Suggested Citation

  • Patrick Maillé & Bruno Tuffin, 2003. "The Progressive Second Price Mechanism in a Stochastic Environment," Netnomics, Springer, vol. 5(2), pages 119-147, November.
    • Handle: RePEc:kap:netnom:v:5:y:2003:i:2:d:10.1023_a:1026058203100
    DOI: 10.1023/A:1026058203100
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    References listed on IDEAS

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    1. Dale O. Stahl, 2002. "The Inefficiency of First and Second Price Auctions in Dynamic Stochastic Environments," Netnomics, Springer, vol. 4(1), pages 1-18, March.
    2. Gupta, Alok & Stahl, Dale O. & Whinston, Andrew B., 1997. "A stochastic equilibrium model of internet pricing," Journal of Economic Dynamics and Control, Elsevier, vol. 21(4-5), pages 697-722, May.
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    Cited by:

    1. Luis Andres Marentes & Sergio Cabrales & Tilman Wolf & Anna Nagurney & Yezid Donoso, 2021. "A bandwidth auction mechanism to enable affordable internet access," Netnomics, Springer, vol. 22(2), pages 283-316, December.
    2. Luis Andres Marentes & Sergio Cabrales & Tilman Wolf & Anna Nagurney & Yezid Donoso, 2022. "A bandwidth auction mechanism to enable affordable internet access," Netnomics, Springer, vol. 22(2), pages 283-316, October.

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