Multicommodity network expansion under elastic demands

We analyze some issues of network design and bandwidth allocation in telecommunication systems with congestible resources. The work is closely related to network monitoring and traffic measurement functions that must be carried out on line, in order to overcome congestion caused by an unfavorable traffic pattern or by a failure. In addition to the traditional use of routing controls, our approach achieves network efficiency and capacity assignment and also imposing variable prices for the consumers. A generalized Benders decomposition method is applied to a mixed integer nonlinear programming formulation of the integrated problem of network design and operation. The method exploits the nature of the continuous subproblem, that is a large-scale convex network flow problem with demands sensitive to commodity prices. Some numerical experience suggests that the method is useful to address both questions of global optimality and competitive pricing in such systems.