On the CDN pricing game

Content Delivery Networks (CDNs) serve a large fraction of Internet traffic today improving user-perceived response time and availability of content. With tens of CDNs competing for content producers, it is important to understand the game played by these CDNs and whether the game is sustainable in the long term. In this paper, we formulate a game-theoretic model to analyze price competition among CDNs. Under this model, we propose an optimal strategy employed by two-CDN games. The strategy is incentive-compatible since any CDN that deviates from the strategy ends up with a lower utility. The strategy is also efficient since it produces a total utility that is at least two thirds of the social optimal utility. We formally derive the sufficient conditions for such a strategy to exist, and empirically show that there exists an optimal strategy for the games with more than two CDNs.