Secondary Spectrum Trading—Auction-Based Framework for Spectrum Allocation and Profit Sharing

Abstract

Recently, dynamic spectrum sharing has been gaining interest as a potential solution to scarcity of available spectrum. We investigate the problem of designing a secondary spectrum-trading market when there are multiple sellers and multiple buyers and propose a general framework for the trading market based on an auction mechanism. To this end, we first introduce a new optimal auction mechanism, called the generalized Branco's mechanism (GBM). The GBM, which is both incentive-compatible and individually rational, is used to determine the assigned frequency bands and prices for them. Second, we assume that buyers of the spectrum are selfish and model their interaction as a noncooperative game. Using this model, we prove that when the sellers employ the GBM to vend their frequency bands, they can guarantee themselves the largest expected profits by selling their frequency bands jointly. Third, based on the previous finding, we model the interaction among the sellers as a cooperative game and demonstrate that, for any fixed strategies of the buyers, the core of the cooperative game is nonempty. This suggests that there exists a way for the sellers to share the profits from the joint sale of the spectrum so that no subset of sellers will find it beneficial to vend their frequency bands separately without the remaining sellers. Finally, we propose a profit-sharing scheme that can achieve any expected profit vector in the nonempty core of the cooperative game while satisfying two desirable properties.