Achieving network optima using Stackelberg routing strategies

In noncooperative networks users make control decisions that optimize their individual performance objectives. Nash equilibria characterize the operating points of such networks. Nash equilibria are generically inefficient and exhibit suboptimal network performance. Focusing on routing, a methodology is devised for overcoming this deficiency, through the intervention of the network manager. The manager controls part of the network flow, is aware of the noncooperative behavior of the users and performs its routing aiming at improving the overall system performance. The existence of maximally efficient strategies for the manager, i.e., strategies that drive the system into the global network optimum, is investigated. A maximally efficient strategy of the manager not only optimizes the overall performance of the network, but also induces an operating point that is efficient with respect to the performance of the individual users (Pareto efficiency). Necessary and sufficient conditions for the existence of a maximally efficient strategy are derived, and it is shown that they are met in many cases of practical interest. The maximally efficient strategy is shown to be unique and it is specified explicitly.