Designing Truthful Spectrum Double Auctions with Local Markets

Market-driven spectrum auctions offer an efficient way to improve spectrum utilization by transferring unused or underused spectrum from its primary license holder to spectrum-deficient secondary users. Such a spectrum market exhibits strong locality in two aspects: 1) that spectrum is a local resource and can only be traded to users within the license area, and 2) that holders can partition the entire license areas and sell any pieces in the market. We design a spectrum double auction that incorporates such locality in spectrum markets, while keeping the auction economically robust and computationally efficient. Our designs are tailored to cases with and without the knowledge of bid distributions. Complementary simulation studies show that spectrum utilization can be significantly improved when distribution information is available. Therefore, an auctioneer can start from one design without any a priori information, and then switch to the other alternative after accumulating sufficient distribution knowledge. With minor modifications, our designs are also effective for a profit-driven auctioneer aiming to maximize the auction revenue.