Competitive Pricing for Spectrum Subleasing for Future Wireless Ad Hoc Networks

This paper envisions a near future in which the proliferation of wireless ad hoc networks in urban centers causes excessive spectrum pollution on currently allocated unlicensed bands. One solution for this problem is for the operators to lease freshly released spectrum from the regulators and sublease it to agencies in major cities. We consider one such operator who divides an urban area into regions and subleases spectrum with the condition that the interference measured at boundary points should not exceed a threshold. The subleasing pricing structure has a fixed part, as well as a variable part that discounts the price based on the margin between the interference threshold and the actual interference. The slope of the variable part is called the discount rate and is determined by a competition that is modeled as a game within a game. For a fixed discount rate, the competition between the customers forms a strategic game. The end result of this game becomes the input to the Stackelberg game between the customers as a whole on the one side and the operator on the other side. We derive the mild condition under which the strategic game of the customers has a unique Nash equilibrium, and obtain an explicit closed form solution for the equilibrium point. This result is then used to derive the best response of the operator and the optimum (Stackelberg equilibrium) discount rate the operator would want to offer. Numerical results obtained through simulations that support the analysis are also provided.