Complementarities in spectrum markets

It is widely recognized that current policies for allocating wireless spectrum have led to inefficiencies and under-utilization. One proposed solution to this is to enable "spectrum markets", which allow for entities to sell and/or lease spectrum dynamically over time. In this paper we consider the design of such a market and how this is influenced by the underlying properties of the wireless medium. In particular, we focus on the role of interference created by different agents who may purchase the use of the same spectrum band at nearby locations. Such interference can result in "complementarities" among the spectrum goods being traded, which complicates the design of an efficient market mechanism. We give a simple model for such complementarities and for which the efficient allocation of spectrum assets to agents can be formulated as an integer program. We characterize the computational complexity of this problem and and the performance of two different linear relaxations. We also comment on the optimal prices for such markets.