A Dynamic Auction for Spectrum Sharing

We propose a dynamic auction for sharing wireless spectrum between a primary high power user and one or more secondary low power users. The good being auctioned is transmission power which can be either allocated to the secondary users for transmission or bought by the primary user to reduce her interference. In this setting, the primary user may have a non-concave valuation, which prohibits applying standard dynamic auctions. Moreover, a policy concern in such settings is often to prevent collusion and fraudulent bidding. Hence, Vickrey mechanisms may not provide the right incentives. We present a mechanism that selects a core outcome that minimizes the seller revenue. Such an allocation is efficient in equilibrium, limits the incentives to use shills, maximizes incentives for truthful bidding, and is incentive compatible when the Vickrey outcome is in the core.