Budget Allocation in a Competitive Communication Spectrum Economy

This study discusses how to adjust “monetary budget” to meet each user’s physical power demand or balance all individual utilities in a competitive “spectrum market” of a communication system. In the market, multiple users share a common frequency or tone band and each of them uses the budget to purchase its own transmit power spectra (taking others as given) in maximizing its Shannon utility or pay-off function that includes the effect of interferences. A market equilibrium is a budget allocation, price spectrum, and tone power distribution that independently and simultaneously maximizes each user’s utility. The equilibrium conditions of the market are formulated and analyzed, and the existence of an equilibrium is proved. Computational results and comparisons between the competitive equilibrium and Nash equilibrium solutions are also presented, which show that the competitive market equilibrium solution often provides more efficient power distribution. Department of Information Technology and Management, Shih-Chien University, 70 Ta-Chih Street, Taipei 10462, Taiwan. E-mail: [email protected]. Research supported in part by Taiwan NSC grants NSC-095-SAF-I-564635-TMS, NSC 96-2416-H-158-003-MY3 and the Fulbright Scholar Program. Department of Business Management, National Taipei University of Technology, 1 Sec.3, Chung-Hsiao E. Road, Taipei 10608, Taiwan. E-mail: [email protected]. Research supported in part by Taiwan NSC grants NSC-095-SAFI-564-640-TMS, NSC 96-2416-H-027-004-MY3 and the Fulbright Scholar Program. Department of Management Science and Engineering, Stanford University, Stanford, CA 94305, USA. E-mail: [email protected]. Research supported in part by NSF DMS-0604513.