Competitive Communication Spectrum Economy and Equilibrium

Abstract

Consider a competitive "spectrum economy" in a communication system where multiple users share a common frequency band and each of them, equipped with an endowed "monetary" budget, will "purchase" its own transmit power spectrum (taking others as given) in maximizing its Shannon utility or pay-off function that includes the effects of interference and subjects to its budget constraint. A market equilibrium is a price spectrum and a frequency power allocation that independently and simultaneously maximizes each user's utility. Furthermore, under an equilibrium the market clears, meaning that the total power demand equals the power supply for every user and every frequency. We prove that such an equilibrium always exists for a discretized version of the problem, and, under a weak-interference condition or the Frequency Division Multiple Access (FMDA) policy, the equilibrium can be computed in polynomial time. This model may lead to an efficient decentralized method for spectrum allocation management and optimization in achieving both higher social utilization and better individual satisfaction. Furthermore, we consider a trading market among individual users to exchange their endowed power spectrum under a price mechanism, and we show that the market price equilibrium also exists and it may lead to a more socially desired spectrum allocation. © 2013 The Author(s).