An integrated contract and auction design for secondary spectrum trading

Providing proper economic incentives to all parties involved is essential for the success of dynamic spectrum access. Market-driven secondary spectrum trading is an effective way to achieve this goal, where primary spectrum owners (POs) temporarily lease their licensed spectrum bands to unlicensed secondary users (SUs). In this paper, we consider the short-term secondary spectrum trading between one PO (seller) and multiple SUs (buyers) in a hybrid spectrum market with both guaranteed contracts (futures market) and spot transactions (spot market). In particular, we focus on the PO's expected profit maximization under revvstochastic network information. The optimal solution consists of (i) a policy that maximizes the ex-ante expected profit based on the distribution of network information, and (ii) a selling mechanism that determines the real-time allocation and charging based on the realized network information and the derived policy. We study the optimal solution systematically under both information symmetry and asymmetry, depending on whether the PO can observe the SUs' realized private information. Under information symmetry, we show that the optimal solution can be achieved by a perfect price discrimination mechanism, which maximizes both the PO's expected profit (optimality) and the social welfare (efficiency). Under information asymmetry, we propose an integrated contract and auction design-ContrAuction-to elicit SUs' private information effectively. We derive analytically the optimal ContrAuction mechanisms that maximize the PO's expected profit with and without the constraint of efficiency, and characterize systematically the tradeoff between the PO's profit and the social welfare. keywords Contract, Auction, Secondary Spectrum Market © 1983-2012 IEEE.