The routing of traffic between Internet domains or Autonomous Systems (ASs), a task known as interdomain routing, is currently handled by the Border Gateway Protocol (BGP). In this paper, we address the problem of interdomain routing from a mechanism-design point of view. The application of mechanism-design principles to the study of routing is the subject of earlier work by Nisan and Ronen [14] and Hershberger and Suri [10]. In this paper, we formulate and solve a version of the

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... sm design problem that is different from the previously studied version in three ways that make it more accurately reflective of real-world interdomain routing: (1) we treat the nodes as strategic agents, rather than the links; (2) our mechanism computes lowestcost routes for all source-destination pairs and payments for transit nodes on all of the routes (rather than computing routes and payments for only one source-destination pair at a time, as is done in [14, 10] ); (3) we show how to compute our mechanism with a distributed algorithm that is a straightforward extension to BGP and causes only modest * . increases in routing-table size and convergence time (in contrast with the centralized algorithms used in [14, 10] ). This approach of using an existing protocol as a substrate for distributed computation may prove useful in future development of Internet algorithms generally, not only for routing or pricing problems. Our design and analysis of a strategyproof, BGP-based routing mechanism provides a new, promising direction in distributed algorithmic mechanism design, which has heretofore been focused mainly on multicast cost sharing.