The Optimality of Two Prices: Maximizing Revenue in a Stochastic Communication System

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Executive Summary

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. The authors first obtain the optimum time-average profit of the AP and prove the "Optimality of two prices" theorem. They, 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. They show the scheme can achieve any average profit that is arbitrarily close to the optimum, with a tradeoff in average delay.

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