Cognitive Radio Networks With Heterogeneous Users: How to Procure and Price the Spectrum?

In this paper, we investigate the optimal spectrum procurement and pricing from the perspective of a cognitive mobile virtual network operator (C-MVNO), which is a second market between the spectrum owner and the secondary users (SUs). The spectrum procurement consists of spectrum leasing and spectrum sensing, where the latter has an uncertain outcome. The SUs are assumed to be heterogeneous in their valuations and demands of the spectrum, which is generally the case in reality. Hence, we use differentiated pricing among the heterogeneous SUs to improve the profit of the C-MVNO and allow the C-MVNO to perform necessary admission control. Modeling the spectrum procurement and trading procedure as a five-stage Stackelberg game, we analyze the optimal decisions for the C-MVNO by using backward induction. The optimal decisions of spectrum sensing, spectrum leasing, admission control, and differentiated pricing are derived, and an algorithm is proposed to compute those optimal decisions efficiently. Our theoretical results are also corroborated by numerical experiments, and a threshold structure of the solution is observed.