Strategic Network Formation through Peering and Service Agreements

We introduce a network formation model called the local contract formation game? (LCPG) in an effort to understand the complex system of business relationships between Autonomous Systems. This system is at the heart of Internet connectivity and by adopting some of the qualities of these relationships, we hope that our model will have some predictive value. In LCPG we are given a network topology of nodes and links where the nodes (modelling domains) act as the players of the game. Every node wishes to satisfy its demands, each with a potential revenue, but needs possibly to pay (or be paid) for links incident to other neighbours in the topology.