Service provider competition and pricing for dynamic spectrum allocation

We consider dynamic spectrum allocation in the downlink between multiple service providers and users, and develop a model that is applicable for many future scenarios. The service providers set prices for spectrum and transmit data to users, who purchase their spectrum. Each provider transmits at a specific power spectral density which is an indicator of the efficiency of the modulation and coding technology used for transmission. A user application is characterized by a utility function of its received rate which is a function of the allocated spectrum, its link gains to the providers and the providers´ transmit power spectral densities. The providers satisfy the spectrum requests of the users by purchasing spectrum from a broker. The providers compete to secure the services of the users and to maximize their profits. Using concepts from microeconomics, we characterize the SP price competition game and show that in the optimal solution each provider has its own customer base. We also characterize the prices charged and profits made by the providers and show how they vary with provider efficiencies and spectrum costs charged by the broker.