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Location Dependent Pricing in Edge Caching Market with Non-Uniform Popularity

Abstract-Edge caching is a key technology to accelerate the content delivery and to mitigate the network congestion. As a real-world example, Microsoft has been providing the edge caching service with a usage-based pricing mechanism since 2009. However, the challenge of designing a better pricing mechanism lies in balancing the finer grain size of the mechanism and the complexity of business operations it required. Our work proposes a novel location dependent pricing mechanism for the edge caching market which both improves the Internet service provider's (ISP) revenue and the social welfare. First, we introduce the location dependent pricing mechanism (LDP) that offers location-specific price, considering the popularity differences between the edge nodes(e.g. base stations, WiFi access points) at different locations. We capture the interactions between the content providers (CPs) and the ISP as a two-stage Stackelberg game and derive the CP's best responses and the ISP's optimal pricing strategy. Then we provide a partial location dependent pricing scheme (PLDP) which limits the number of price tiers to provide a balance between the optimality and economic viability. Finally, through extensive numerical simulation, we find that the LDP (or PLDP) improves the revenue of the ISP by 31%↑50% (23%↑%35) and also improves the social welfare by 46% (%32) on average, compared to the uniform pricing scheme.