Competitive Communication Spectrum Economy and Equilibrium

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Competitive Communication Spectrum Economy and Equilibrium Yinyu Ye

Received: 22 October 2013 / Accepted: 26 October 2013 © The Author(s) 2013. This article is published with open access at Springerlink.com

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. Keywords Spectrum management · Competitive economy equilibrium · Convex optimization · Complementarity

This work was supported by National Science Foundation Grants (Nos. DMS-0604513 and GOALI 0800151), and Air Force Office of Scientific Research Grant (No. FA9550-09-1-0306).

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Y. Ye ( ) Department of Management Science and Engineering, Stanford University, Stanford, CA 94305, USA e-mail: [email protected]

Y. Ye

1 Introduction Consider a communication system where multiple users share a common frequency band such as cognitive radio (e.g., [15]) or Digital Subscribe Lines (DSL, e.g., [23]), where interference mitigation is a major design and management concern. A standard approach to eliminate multi-user interference is to divide the available spectrum into multiple tones (or bands) and pre-assign them to the users on a non-overlapping basis, called Frequency Division Multiple Access (FDMA) policy. Although such an approach is well-suited for high speed structured communication in which quality of service is a major concern, it can lead to high system overhead and low bandwidth utilization. With the proliferation of various radio devices and services, multiple wireless systems sharing a common spectrum must coexist [15], and we are naturally led to a situation whereby users can dynamically adjust their transmit power spectral densities over the entire shared spectrum, potentially achieving significantly higher overall throughput and fairness. For such a mu