GAME THEORETIC FLOW AND ROUTING CONTROL FOR COMMUNICATION NETWORKS

As the need to support high speed data exchange in modern communication networks grows rapidly, effective and fair sharing of the network resources becomes very important. Today's communication networks typically involve a large number of users that share the same network resources but may have different, and often competing, objectives. Advanced network protocols that are implemented to optimize the performance of such networks typically assume that the users are passive and are willing to accept compromising their own performance for the sake of optimizing the performance of the overall network. However, considering the trend towards more decentralization in the future, it is natural to assume that the users in a large network may take a more active approach and become more interested in optimizing their own individual performances without giving much consideration to the overall performance of the network. A similar situation occurs when the users are members of teams that are sharing the network resources. A user may find itself cooperating with other members of its team which itself is competing with the other teams in the network. Game theory appears to provide the necessary framework and mathematical tools for formulating and analyzing the strategic interactions among users, or teams of users, of such networks. In this thesis, we investigate networks in which users, or teams of users, either compete or cooperate for the same network resources. We considered two important network topologies and used many examples to illustrate the various solution concepts that we have investigated.. First we consider two-nodeiiiparallel link networks with non-cooperative users trying to optimally distribute their flows among the links. For these networks, we established a condition which guarantees the existence and uniqueness of a Nash equilibrium for the link flows. We derived an analytical expression for the Nash equilibrium and investigated its properties in terms of the network parameters and the users preferences. We showed that in a competitive environment users can achieve larger flow rates by properly emphasizing the corresponding term in their utility functions, but that this can only be done at the expense of an increase in the expected delay. Next, we considered a general network structure with multiple links, multiple nodes, and multiple competing users. We proved the existence of a unique Nash equilibrium. We also investigated many of its intuitive properties. We also extended the model to a network where multiple teams of users compete with each other while cooperating within the teams to optimize a team level performance. For this model, we studied the Noninferior Nash solution and compared its results with the standard Nash equilibrium solution

Electric power network oligopoly as a dynamic Stackelberg game

Over the last two decades, the electricity industry has shifted from regulation of monopolistic and centralized utilities towards deregulation and promoted competition. With increased competition in electric power markets, system operators are recognizing their pivotal role in ensuring the efficient operation of the electric grid and the maximization of social welfare. In this article, we propose a hypothetical new market of dynamic spa- tial network equilibrium among consumers, system operators and electricity generators as the solution of a dynamic Stackelberg game. In that game, generators form an oligopoly and act as Cournot-Nash competitors who non-cooperatively maximize their own profits. The market monitor attempts to increase social welfare by intelligently employing equi- librium congestion pricing anticipating the actions of generators. The market monitor influences the generators by charging network access fees that influence power flows to- wards a perfectly competitive scenario. Our approach anticipates uncompetitive behavior and minimizes the impacts upon society. The resulting game is modeled as a Mathemat- ical Program with Equilibrium Constraints (MPEC). We present an illustrative example as well as a stylized 15-node network of the Western European electric grid

Market structure and competition: an empirical analysis of the U.S. airline industry

This thesis studies degree of competitiveness in the airline industry inferred by investigation of market structure. Chapter 2 documents empirical evidence that endogenous sunk costs investments in advertising and in expanding route network play a crucial role in determining equilibrium market structure and, that the industry is a natural oligopoly. In chapter 3 we perform an empirical analysis of market structure beyond the bounds approach, to explain firm numbers and market share asymmetry for city pair markets. In addition, splitting firms into two types, leaders and non-leaders, it is proposed evidence that nature of competition depends on presence of leader airlines. In particular, there is evidence consistent with learning; that is, non-leaders infer profitability of routes from the number and identity of leaders. Chapter 4 proposes two econometric models of entry to analyze market sharing agreements

The gas chain: influence of its specificities on the liberalisation process. NBB Working Papers. No. 122, 16 November 2007

Like other network industries, the European gas supply industry has been liberalised, along the lines of what has been done in the United Kingdom and the United States, by opening up to competition the upstream and downstream segments of essential transmission infrastructure. The aim of this first working paper is to draw attention to some of the stakes in the liberalisation of the gas market whose functioning cannot disregard the network infrastructure required to bring this fuel to the consumer, a feature it shares with the electricity market. However, gas also has the specific feature of being a primary energy source that must be transported from its point of extraction. Consequently, opening the upstream supply segment of the market to competition is not so obvious in the European context, because, contrary to the examples of the North American and British gas markets, these supply channels are largely in the hands of external suppliers and thus fall outside the scope of EU legislation on the liberalisation and organisation of the internal market in gas. Competition on the downstream gas supply segment must also adapt to the constraints imposed by access to the grid infrastructure, which, in the case of gas in Europe, goes hand in hand with the constraint of dependence on external suppliers. Hence the opening to competition of upstream and downstream markets is not "synchronous", a discrepancy which can weaken the impact of liberalisation. Moreover, the separation of activities necessary for ensuring free competition in some segments of the market is coupled with major changes in the way the gas chain operates, with the appearance of new markets, new price mechanisms and new intermediaries. Starting out from a situation where gas supply was in the hands of vertically-integrated operators, the new regulatory framework that has been set up must, on the one hand, ensure that competitive forces can be given free rein, and, on the other hand, that free and fair competition helps the gas chain to operate coherently, at lower cost and in the interests of consumers, for whom the stakes are high as natural gas is an important input for many industrial manufacturing processes, even a "commodity" almost of basic necessity

The gas chain : influence of its specificities on the liberalisation process

Like other network industries, the European gas supply industry has been liberalised, along the lines of what has been done in the United Kingdom and the United States, by opening up to competition the upstream and downstream segments of essential transmission infrastructure. The aim of this first working paper is to draw attention to some of the stakes in the liberalisation of the gas market whose functioning cannot disregard the network infrastructure required to bring this fuel to the consumer, a feature it shares with the electricity market. However, gas also has the specific feature of being a primary energy source that must be transported from its point of extraction. Consequently, opening the upstream supply segment of the market to competition is not so obvious in the European context, because, contrary to the examples of the North American and British gas markets, these supply channels are largely in the hands of external suppliers and thus fall outside the scope of EU legislation on the liberalisation and organisation of the internal market in gas. Competition on the downstream gas supply segment must also adapt to the constraints imposed by access to the grid infrastructure, which, in the case of gas in Europe, goes hand in hand with the constraint of dependence on external suppliers. Hence the opening to competition of upstream and downstream markets is not "synchronous", a discrepancy which can weaken the impact of liberalisation. Moreover, the separation of activities necessary for ensuring free competition in some segments of the market is coupled with major changes in the way the gas chain operates, with the appearance of new markets, new price mechanisms and new intermediaries. Starting out from a situation where gas supply was in the hands of vertically-integrated operators, the new regulatory framework that has been set up must, on the one hand, ensure that competitive forces can be given free rein, and, on the other hand, that free and fair competition helps the gas chain to operate coherently, at lower cost and in the interests of consumers, for whom the stakes are high as natural gas is an important input for many industrial manufacturing processes, even a "commodity" almost of basic necessity.network industries, gas industry, gas utility, liberalisation, regulation, deregulation, market structure, European gas supply, oligopoly, OPEG

Three essays on horizontal product differentiation and price dispersion

The first essay provides an introduction into the literature of spatial competition models and studies their predictions on the degree of horizontal product differentiation. For this purpose a selection of articles, mainly from the game theoretical strand of the literature, is re-examined in which each model extends and modifies basic parameters of the original model of Hotelling (1929). The literature survey emphasizes that markets consisting of intersecting roads represent a particular fruitful subject of future research. The nature of competition in this market setting is different compared to the linear city exemplified by the importance of asymmetrical location patterns. Consequently, the strategic interaction, firms' profit-maximizing behavior and potential equilibrium outcomes under sequential entry in a market with intersecting roads remain to be an interesting field to study. The second essay addresses this research gap and based on the work of Anderson (1987) studies a two-stage market entry game in a spatially extended Hotelling's duopoly. Particularly, the effect of a demand dependent centrality bonus Z distributed in the middle of the linear city is examined on the reaction functions of an incumbent firm and the strategic entry decision of an entrant firm. A solution is provided for an entry accommodating scenario where both players optimize profits over their strategic variables and the center Z is taken by the incumbent firm. The results further suggest that the entrant is not capable of capturing Z. In addition, the model implies a lower degree of product differentiation as Z increases. A comparison with the literature shows that these results are well in line with Anderson's model for Z = 0. In a business strategy view the outcome supports the thesis of Gelman & Salop (1983), coined by the term 'judo economics', since the entrant earns highest profits by committing himself to a distant location and charging a comparatively lower price than the incumbent. The third essay analyzes the price distribution of diesel in the Austrian retail gasoline market and tests predictions of the impact of the fraction of informed and uninformed consumers on the mean price and price variance. Further, introducing two measures of spatial competition, the relation of local competition between stations and the mean and variance are examined. In a pooled cross-section analysis a two step approach is followed. Initially, price levels are estimated with respect to the influence of competition, search costs, stations' location and further station-specific characteristics. Controlling for these observable price characteristics, the residuals are used in the second step to investigate the behavior of the price variance. In addition to OLS, to account for spatial spillover effects a Spatial Error Model (SEM) is applied to estimate the price function. Additionally, tests on model specification and robustness checks using different weighting matrices, search cost proxies and dispersion measures are carried out. The results reveal a negative (positive) correlation between the fraction of informed (uninformed) consumers and the mean price. Further, price variance shows an inverse U-shape with the fraction of informed consumers. Thus, the variance initially increases as the proportion of informed consumers increases and starts to decline after the share of informed exceeds a threshold of roughly 43%. These findings are in line with predictions of classical search models, most notably Stahl (1989), and empirically support the meaning of consumer search in the context of oligopolistic pricing. Further, the mean price decreases as competition intensifies whereas the Price variance increases under increased entry competition (Janssen & Moraga-Gonzalez (2004), Carlson & McAfee (1983)). This suggests stations' tendency to focus more strongly on the lower price segment as competition increases

Facilitating Cooperative Truck Platooning for Energy Savings: Path Planning, Platoon Formation and Benefit Redistribution

Enabled by the connected and automated vehicle (CAV) technology, cooperative truck platooning that offers promising energy savings is likely to be implemented soon. However, as the trucking industry operates in a highly granular manner so that the trucks usually vary in their operation schedules, vehicle types and configurations, it is inevitable that 1) the spontaneous platooning over a spatial network is rare, 2) the total fuel savings vary from platoon to platoon, and 3) the benefit achieved within a platoon differs from position to position, e.g., the lead vehicle always achieves the least fuel-saving. Consequently, trucks from different owners may not have the opportunities to platoon with others if no path coordination is performed. Even if they happen to do so, they may tend to change positions in the formed platoons to achieve greater benefits, yielding behaviorally unstable platoons with less energy savings and more disruptions to traffic flows. This thesis proposes a hierarchical modeling framework to explicate the necessitated strategies that facilitate cooperative truck platooning. An empirical study is first conducted to scrutinize the energy-saving potentials of the U.S. national freight network. By comparing the performance under scheduled platooning and ad-hoc platooning, the author shows that the platooning opportunities can be greatly improved by careful path planning, thereby yielding substantial energy savings. For trucks assembled on the same path and can to platoon together, the second part of the thesis investigates the optimal platoon formation that maximizes total platooning utility and benefits redistribution mechanisms that address the behavioral instability issue. Both centralized and decentralized approaches are proposed. In particular, the decentralized approach employs a dynamic process where individual trucks or formed platoons are assumed to act as rational agents. The agents decide whether to form a larger, better platoon considering their own utilities under the pre-defined benefit reallocation mechanisms. Depending on whether the trucks are single-brand or multi-brand, whether there is a complete information setting or incomplete information setting, three mechanisms, auction, bilateral trade model, and one-sided matching are proposed. The centralized approach yields a near-optimal solution for the whole system and is more computationally efficient than conventional algorithms. The decentralized approach is stable, more flexible, and computational efficient while maintaining acceptable degrees of optimality. The mechanisms proposed can apply to not only under the truck platooning scenario but also other forms of shared mobility.PHDCivil EngineeringUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/163047/1/xtsun_1.pd