## 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.

Original language | English |
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Title of host publication | Internet and Network Economics - 6th International Workshop, WINE 2010, Proceedings |

Pages | 444-454 |

Number of pages | 11 |

Volume | 6484 LNCS |

DOIs | |

Publication status | Published - 2010 |

MoE publication type | A4 Article in a conference publication |

Event | International Workshop on Internet and Network Economics - Stanford, United States Duration: 13 Dec 2010 → 17 Dec 2010 Conference number: 6 |

### Publication series

Name | Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics) |
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Volume | 6484 LNCS |

ISSN (Print) | 03029743 |

ISSN (Electronic) | 16113349 |

### Workshop

Workshop | International Workshop on Internet and Network Economics |
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Abbreviated title | WINE |

Country/Territory | United States |

City | Stanford |

Period | 13/12/2010 → 17/12/2010 |