Pricing design of power control game in WDM optical networks via state-space approach

The static nature of the noncooperative power control game model in optical networks makes it difficult to study and design an appropriate pricing scheme. In this paper, we derive a first-order best response dynamics from the game-theoretical model and formulate a general multi-input and multi-output (MIMO) state-space model. We use classical linear system theory to explain the controllability of the pricing and the observability of the power states. We use the output regulator theory to design a pricing policy for the network for a given optical signal-to-noise ratio (OSNR) target At the end of the paper, we will illustrate the pricing design on a typical end-to-end optical link in DWDM optical networks.