Abstract: In [7], Mackie-Mason and Varian suggested the creation of a Smart market for the pricing of Internet services, based on the idea of having a Vickrey-ty- pe auction, at the packet level, at each node of the network. While this idea has attracted the attention of numerous researchers, in telecommunication- s and in economics, no optimization model has to date been proposed that captures this behavior. In this paper, we present such a mathematical model. We provide techniques for solving the model through an equivalent linear transformation, and present some numerical experience on sample networks.