The formulas from which valuations are derived are provided below. You may wish to enter them into a spreadsheet to analyze them. Remember, these formulas determine what you bid, but your actual cost is based on the market price The price for something that buyers and sellers agree on. Merkato establishes a market price for bandwidth during each spot market The Merkato mechanism by which bandwidth is traded, in a progressive second price auction. An optimal fair market price is established and bandwidth is allocated to buyers, based on their bids relative to other buyers. auction round. There is a fixed amount for sale, so as demand increases, prices rise. The market price is reached when the cumulative demand of all the buyers is exactly equal to the amount of bandwidth being offered by the seller. as determined by progressive second price auction rules.
The curves defined by these formulas vary according to settings in the valuation The value a buyer or seller places on bandwidth. Setting a valuation is part of setting a purchasing strategy. Valuation settings within a buyer agent The program that interacts with the rest of Merkato on behalf of buyers and sellers. Buyers can acquire bandwidth by configuring their agents to offer the price they are willing to pay for a range of available quantity, or use their agent to request a quote for a fixed-price bandwidth reservation. Sellers configure their agents with a quantity of bandwidth for sale and a minimum price they are willing to accept for that quantity. let buyers specify the amount they are willing to pay for varying amounts of bandwidth. This information is used by the agent to respond to changing market conditions during a Merkato progressive second price auction. windows. To avoid confusion, the names of the settings have been given in the formulas as:
· Budget for budget settings in budget-based valuations
· MaxQty for either Max Qty in Budget Valuation With Limits or the single Qty setting in the other valuation windows
· MinQty for the minimum quantity setting in the Budget-with-limits valuation
· MaxValue for the Value setting in the valuation windows
The variables in the equations are:
· Price for the unit price
· Qty for the quantity of bandwidth The amount of data transmitted or received per unit of time. When we refer to acquiring or selling bandwidth, we mean the amount of information that can be sent over a connection at one time, at the allowed speed, without packet loss or excessive delay. Bandwidth is measured in bits-per-second. that will be requested at that price
Note that the units you use do not matter as long as you are consistent throughout:
· Budget is specified in currency-per-unit-time (such as $/month).
· “Quantities” are quantities of bandwidth expressed in Gbps One of the ways of expressing units of bandwidth; Gigabits-per-second (1,000,000,000 bits-per-second). , Mbps One of the ways of expressing units of bandwidth-Megabits-per-second (1,000,000 bits-per-second). , or kbps One of the ways of expressing units of bandwidth-kilobits-per-second (1,000 bits-per-second). .
· Price is specified in currency per unit bandwidth per unit time (such as $/Mbps/Month).
· MaxValue is given in terms of currency per unit time (such as $/month).
To convert a price equation to cost, multiply the price equation by the quantity variable (“Qty” in the equations).
Price = Budget / Qty
For Qty < MinQty
Price = Budget / MinQty
For MinQty <= Qty <= MaxQty
Price = Budget / Qty
For Qty > MaxQty
Price = 0
For Qty <= MaxQty
Price = MaxValue / MaxQty
For Qty > MaxQty
Price = 0
Note: “SQRT” = Square Root of what follows in parentheses
For Qty <= MaxQty
Price = MaxValue / (2 * SQRT (MaxQty)*SQRT(Qty))
For Qty > MaxQty
Price = 0
Note: “Ln” = Natural logarithm of what follows in parentheses
For Qty <= MaxQty
Price = (MaxValue / MaxQty ) * Ln(MaxQty / Qty )
For Qty > MaxQty
Price = 0