What are some problems with a smart market?
Prices in a real-world smart market cannot be updated continuously. The efficient price is determined by comparing a list of user bids to the available capacity and determining the cutoff price. In fact, packets arrive not all at once but over time, and thus it would be necessary to clear the market periodically based on a time-slice of bids. The efficiency of this scheme, then, depends on how costly it is to frequently clear the market and on how persistent the periods of congestion are. If congestion is exceedingly transient then by the time the market price is updated the state of congestion may have changed. A number of network specialists have suggested that many customers—particularly not-for-profit agencies and schools—will object because they do not know in advance how much network utilization will cost them. We believe that this argument is partially a red herring, since the user’s bid always controls the maximum that network usage costs. Indeed, since we expect that for m
Prices in a real-world smart market cannot be updated continuously. The efficient price is determined by comparing a list of user bids to the available capacity and determining the cutoff price. In fact, packets arrive not all at once but over time, and thus it would be necessary to clear the market periodically based on a time-slice of bids. The efficiency of this scheme, then, depends on how costly it is to frequently clear the market and on how persistent the periods of congestion are. If congestion is exceedingly transient then by the time the market price is updated the state of congestion may have changed. A number of network specialists have suggested that many customers- particularly not-for-profit agencies and schools–will object because they do not know in advance how much network utilization will cost them. We believe that this argument is partially a red herring, since the user’s bid always controls the maximum network usage costs. Indeed, since we expect that for most tra
