Improved Hardness of Approximation for Stackelberg Shortest-Path Pricing

  • Patrick Briest
  • Parinya Chalermsook
  • Sanjeev Khanna
  • Bundit Laekhanukit
  • Danupon Nanongkai
Conference paper

DOI: 10.1007/978-3-642-17572-5_37

Part of the Lecture Notes in Computer Science book series (LNCS, volume 6484)
Cite this paper as:
Briest P., Chalermsook P., Khanna S., Laekhanukit B., Nanongkai D. (2010) Improved Hardness of Approximation for Stackelberg Shortest-Path Pricing. In: Saberi A. (eds) Internet and Network Economics. WINE 2010. Lecture Notes in Computer Science, vol 6484. Springer, Berlin, Heidelberg

Abstract

We consider the Stackelberg shortest-path pricing problem, which is defined as follows. Given a graph G with fixed-cost and pricable edges and two distinct vertices s and t, we may assign prices to the pricable edges. Based on the predefined fixed costs and our prices, a customer purchases a cheapest s-t-path in G and we receive payment equal to the sum of prices of pricable edges belonging to the path. Our goal is to find prices maximizing the payment received from the customer. While Stackelberg shortest-path pricing was known to be APX-hard before, we provide the first explicit approximation threshold and prove hardness of approximation within 2 − o(1). We also argue that the nicely structured type of instance resulting from our reduction captures most of the challenges we face in dealing with the problem in general and, in particular, we show that the gap between the revenue of an optimal pricing and the only known general upper bound can still be logarithmically large.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  • Patrick Briest
    • 1
  • Parinya Chalermsook
    • 2
  • Sanjeev Khanna
    • 3
  • Bundit Laekhanukit
    • 4
  • Danupon Nanongkai
    • 5
  1. 1.Department of Computer ScienceUniversity of PaderbornGermany
  2. 2.Department of Computer ScienceUniversity of ChicagoUSA
  3. 3.Department of Computer and Information ScienceUniversity of PennsylvaniaUSA
  4. 4.Department of Computer ScienceMcGill UniversityCanada
  5. 5.College of Computing, Georgia TechAtlantaUSA

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