Abstract
We investigate the cost allocation strategy associated with the problem of providing some network service from source to a number of users, via the Minimum Cost Steiner Tree Network that spans the source and all the receivers. The cost of such a Steiner tree network, is distributed among its receivers. The objective of this paper is to develop a reasonably fair and computationally efficient cost allocation rule associated with the above cost allocation problem. Since finding the optimal Steiner tree is an NP-hard problem, the input to our cost allocation problem is the best known solution obtained using some heuristic. In order to allocate the cost of this Steiner tree to the users (receiver nodes), we formulate the associated Steiner Tree Network (STN) game in characteristic function form. It is well known that the core of the general STN game might be empty. We propose a new cost allocation rule for the modified STN game which might be attractive to network users due to its monotonic properties, associated with network growth.