The routing of traffic between... this paper, we address the problem of interdomain routing from a mechanism-design point of view. The application of mechanism-design principles to the study of routing is the subject of earlier work by Nisan and Ronen [15] and Hershberger and Suri [11]. In this paper, we formulate and solve a version of the routing-mechanism design problem that is different from the previously studied version in three ways that make it more accurately reflective of real-world interdomain routing: (1) we treat the nodes as strategic agents, rather than the links; (2) our mechanism computes lowest-cost routes for all source-destination pairs and payments for transit nodes on all of the routes (rather than computing routes and payments for only one source-destination pair at a time, as is done in [15,11]); (3) we show how to compute our mechanism with a distributed algorithm that is a straightforward extension to BGP and causes only modest increases in routingtable size and convergence time (in contrast with the centralized algorithms used in [15,11]). This approach of using an existing protocol as a substrate for distributed computation may prove useful in future development of Internet algorithms generally, not only for routing or pricing problems. Our design and analysis of a strategyproof, BGP-based routing mechanism provides a new, promising direction in distributed algorithmic mechanism design, which has heretofore been focused mainly on multicast cost sharing.

The routing of traffic between Internet domains, or Autonomous Systems (ASes), a task known as interdomain routing, is currently handled by the Border Gateway Protocol (BGP) [17]. Using BGP, autonomous systems can apply semantically rich routing policies to choose interdomain routes in a distributed fashion. This expressiveness in routing-policy choice supports domains ’ autonomy in network operations and in business decisions, but it comes at a price: The interaction of locally defined routing policies can lead to unexpected global anomalies, including route oscillations or overall protocol divergence (see, e.g., [20]). Networking researchers have addressed this problem by devising constraints on policies that guarantee BGP convergence without unduly limiting expressiveness and autonomy (see, e.g., [7, 8]). In addition to taking this engineering or “protocol-design ” approach, researchers have approached interdomain routing from an economic or “mechanism-design ” point of view. It is known that lowest-cost-path (LCP) routing can be implemented in a truthful, BGP-compatible manner [3] but that several other natural classes of routing policies cannot [2, 5]. In this paper, we present a natural class of interdomain-routing policies that is more realistic than LCP routing and admits incentive-compatible, BGP-compatible implementation. We also present several positive steps toward a general theory of incentive-compatible interdomain routing.