We consider the resource allocation problem related to Virtual Private Networks (VPNs). VPN provides connections between geographically dispersed endpoints over a shared network. To realize VPN service, sufficient amount of bandwidth of network resources must be reserved for any traffic demand specified by a customer. We assume that there are many customers that want to purchase VPN services, and many network providers that offer their network resources for sale. We present a multicommodity auction model that enables the efficient management of the network resources in the market environment. On the other hand it is very convenient for the customers as it allows them to specify the bandwidth requirements concerning VPN in a very flexible way, including pipe and hose VPN representations. The proposed model has also many other valuable properties, such as individual rationality and budget balance. The auction model has a form of LP for which the computational efficiency can be improved by applying the column generation technique.