Abstract-The rapidly growing demand for wireless communication makes efficient power allocation a critical factor in the network's efficient operation. Power allocation in decentralized wireless systems, where the transmission of a user creates interference to other users and directly affects their utilities, has been recently studied by pricing methods. However, pricing methods do not result in efficient/optimal power allocations for such systems for the following reason. Systems where a user's actions directly affect the utilities of other users are known to have externalities. It is well known from Mas-Colell et al. that in systems with externalities, standard efficiency theorems on market equilibrium do not apply and pricing methods do not result in Pareto optimal outcomes. In this paper, we formulate the power allocation problem for a wireless network as an allocation problem with "externalities." We consider a system where each user knows only its own utility and the channel gains from the transmitters of other users to its own receiver. The system has multiple interference temperature constraints to control interference. We present a decentralized algorithm to allocate transmission powers to the users. The algorithm takes into account the externality generated to the other users by the transmission of each user, satisfies the informational constraints of the system, overcomes the inefficiency of pricing mechanisms and guarantees convergence to globally optimal power allocations.
The rapidly growing demand for wireless communication makes efficient power allocation a critical factor in the network's efficient operation. Power allocation in cellular networks with interference, where users are selfish, has been recently studied by pricing methods. However, pricing methods do not result in efficient/optimal power allocations for such systems for the following reason. Because of interference, the communication between the Base Station (BS) and a given user is affected by that between the BS and all other users. Thus, the power vector consisting of the transmission power in each BS-user link can be viewed as a public good which simultaneously affects the utilities of all the users in the network. It is well known (Mas-Colell et al., Microeconomic Theory, Oxford University Press, London, 2002, Chap. 11.C) that in public good economies, standard efficiency theorems on market equilibrium do not apply and pricing mechanisms do not result in globally optimal allocations. In this paper we study power allocation in the presence of interference for a single cell wireless Code Division Multiple Access (CDMA) network from a game theoretic perspective. We consider a network where each user knows only its own utility and the channel gain from the base station to itself. We formulate the uplink power allocation problem as a public good allocation problem. We present a game form the Nash Equilibria of which yield power allocations that are optimal solutions of the corresponding centralized uplink network.
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