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The optimality of two prices: maximizing revenue in a stochastic communication system

Published: 01 April 2010 Publication History

Abstract

This paper considers the problem of pricing and transmission scheduling for an access point (AP) in a wireless network, where the AP provides service to a set of mobile users. The goal of the AP is to maximize its own time-average profit. We first obtain the optimum time-average profit of the AP and prove the "Optimality of Two Prices" theorem. We then develop an online scheme that jointly solves the pricing and transmission scheduling problem in a dynamic environment. The scheme uses an admission price and a business decision as tools to regulate the incoming traffic and to maximize revenue. We show the scheme can achieve any average profit that is arbitrarily close to the optimum, with a tradeoff in average delay. This holds for general Markovian dynamics for channel and user state variation, and does not require a priori knowledge of the Markov model. The model and methodology developed in this paper are general and apply to other stochastic settings where a single party tries to maximize its time-average profit.

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Published In

cover image IEEE/ACM Transactions on Networking
IEEE/ACM Transactions on Networking  Volume 18, Issue 2
April 2010
339 pages

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IEEE Press

Publication History

Published: 01 April 2010
Revised: 31 July 2008
Received: 30 October 2007
Published in TON Volume 18, Issue 2

Author Tags

  1. Lyapunov analysis
  2. dynamic control
  3. optimization
  4. pricing
  5. queueing
  6. wireless mesh network

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