Generalized Proportional Allocation Mechanism Design for Multi-rate Multicast Service on the Internet

Abstract. In this paper we construct two mechanisms that fully implement social welfare maximising allocation in Nash equilibria for the case of single infinitely divisible good being demanded by a separate groups of agents, whilst being subject to multiple inequality constraints. The nature of the good demanded is such that it can be duplicated locally at no cost. The first mechanism achieves weak budget balance, while the second is an extension of the first, and achieves strong budget balance at equilibrium. One important application of these mechanisms is the multi-rate multicast service on the Internet where a network operator wishes to allocate rates among strategic agents, who are segregated in groups based on the content they demand (while their demanded rates could be different), in such a way that maximises overall user satisfaction while respecting capacity constraints on every link in the network. The emphasis of this work is on full implementation, which means that all Nash equilibria of the induced game result in the optimal allocations of the centralized allocation problem. 1