Joint optimization of information trading in Internet of Things (IoT) market with externalities

Abstract

Internet of Things (IoT) technology enables various physical devices to collect, process and exchange information. Market oriented models become important for IoT systems to efficiently utilize information, as IoT network nodes operate in a highly distributed and autonomous manner. In this work, we propose a three-player game theoretic market model for IoT information trading, considering direct and indirect externalities among market participants. In the model, an IoT service provider collects and processes IoT information, and then delivers the processed information as IoT services to IoT users. Then, an IoT content vendor senses and generates raw information for the IoT service provider to collect, and receives rewards from the provider. Finally, an IoT user pays a fixed service fee to the IoT service provider to access the IoT services. To jointly derive the optimal market decisions of the three participants in the model, we employ a Stackelberg game approach. The equilibria are obtained as the closed form solutions of the game, with which the existence and uniqueness properties are proved. The analytical results show that the IoT service provider operates as an intermediary agent between the IoT content vendor and users, reducing the information trading complexity of both user and vendor sides.