An MDP framework for centralized dynamic spectrum auction

Public administrations assign the spectrum bands to wireless operators by a license scheme. Generally, operators gain spectrum licenses by bidding for them in public auction processes (primary market). The increasing demand of spectrum and the existence of spectrum holes have revealed the inefficiency of this mechanism. One practical and economically feasible way to solve this inefficiency is to allow spectrum owners to sell their spectrum opportunities in a secondary market. In order to do this in realtime, a protocol is required to support negotiations on access price, channel holding time, etc., between the spectrum owner and secondary users. In this work, we consider the bid-auction model, in which secondary users bid for the spectrum of a single spectrum owner. We explore the possibilities of a formal design based on a Markov decision process (MDP) formulation which has to consider the trade-off between the blocking probability of primary users and the expected revenue.