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This paper describes an on-line auction process for dynamic bandwidth allocation in communication networks. The auction is intended to be repeated at short (perhaps ten minute) intervals. The outcome of the auction gives both the bandwidth allocation, and the price to be paid for it. The network is assumed to be MPLS capable, and two variations are provided, one in which a single LSP is available between each source/destination pair, and another in which multiple LSPs are available. We show that the present algorithms are scalable up to about 150 nodes.