IERG 5330: Network Economics

Fall 2018

The Chinese University of Hong Kong
Dept of Information Engineering

Announcements | Administrative Info | Course Info | Lecture Notes | Homework | Presentation | Project | Peer Evaluation


  • November 22: Project Presentation schedule posted.
  • October 29: Paper presentation schedule slighly updated. One group moved from Nov. 1 to Nov. 8.
  • October 23: HW 4 announced, due November 5.
  • October 19: The project schedule has been updated. Deadline of submitting project proposal has been extended to Oct 29 (Monday).
  • October 9: Paper presentation schedule posted.
  • October 2: HW 3 announced, due Oct 15 (Monday).
  • September 26 (updated): HW 2 announced, due September 30 (Sunday), 10pm. Please submit your homework through the Blackboard system. If you handwrite your homework, you can use many free or cheap scan apps on smart phones to scan and turn the document into a single PDF file.
  • September 18: List of recommended readings and peer evaluation rules posted. As currently we have four students per group for both the paper presentation and the project, the workload per student is ligher than the past years. Hence I am increasing the grade percentage of homework to 40% and reduce the project grade percentage to 35%.
  • September 11: We will post the list of recommended readings on September 18. The TA will assign papers to groups based on preferences received (by September 28), in the first-come-first-serve manner.
  • September 4: HW 1 announced. Due September 17.
  • August 28: Course website up and running.

Administrative Info

Instructor: Prof. HUANG Jianwei (SHB 718, jwhuang [a]

Tutor: Ming Tang (SHB 825, tangmingscu [a]

Office hour: by email appointment

Course web site:

Lecture Time: Wednesday 2:30 - 3:15pm, Thursday 2:30 - 4:15pm, ERB 1009.

Course Outline, Student Teacher Expectations, University Anti-Plagiarism Policy (Video Guide)

Course Info

Intended audience: graduate students who are interested in using economics and game theory to study networks (e.g., communication networks, social networks, energy networks).

Background: Through this course, you will learn the basics of network economics and selected advanced topics related to the modeling and design of various networking systems (communication networks in particular). Tentative topics include:

  • Theory: economics, game theory, pricing theory, and network externalities (if time allows).
  • Applications: wireless random MAC, cognitive radio system, network upgrade, congestion control, internet routing, internet pricing, distributed power control, P2P systems, ISP interactions, social networks, energy networks.

Prerequisite: a strong desire to learn. Background on communication networking and exposure to optimizations theory are strongly encouraged although not required. The topics will be fun (we will talk about games and money!), but you are expected to work hard.

Course materials: The lectures will be mainly based on References 1, with additional information from References 2 - 5 when time allows. Reference 6 - 9 are more advanced readings.

  1. WNP: Wireless Network Pricing, by J. Huang and L. Gao, Morgan Claypool Publishers, 2013
  2. Economic Modeling in Networking: A Primer, by R. Berry and R. Johari, Foundations and Trends in Networking, Now Publisher, 2013
  3. Network Games: Theory, Models, and Dynamics, by I. Menache and A. Ozdaglar, Morgan and Claypool Publishers, 2010
  4. How Do We Play Games, by Jianwei Huang, 3-hour online tutorial on game theory (search for "我们如何博弈" in Youku)
  5. Pricing Communication Networks: Economics, Technology and Modeling, by C. Courcoubetis and R. Weber, Wiley, 2003
  6. Game Theory, by D. Fudenberg and J. Tirole, MIT Press, 1991
  7. Game Theory for Applied Economists, by R. Gibbons, Princeton Press, 1992
  8. Games and Information, by E. Rasmusen, Blackwell Publishing, 4th edition, 2007
  9. Convex Optimization, by S. Boyd and L. Vandenberghe, Cambridge University Press, 2004
  10. Network Optimization and Control, by S. Shakkottai and R. Sriaknt, Foundations and Trends in Networking, Now Publisher, 2008
  11. Parallel and Distributed Computation:Numerical Methods, by D. Bertsekas and J. Tsitsiklis, Prentice-Hall, 1989
  12. Layering as Optimization Decomposition, M. Chiang, S. Low, R. Calderbank, J. Doyle, Proceedings of IEEE, 2006 (Tutorial Slides)

Here are some of my personal favourite leisure readings about economics (and psychology, which is the underlying science for decision making in economics):

Evaluations: Homework (40%), Paper Presentation (20%), In-Class Participation (5%), Project (35%). There is no mid-term and no final exam.

Lecture and Presentations

Class Schedule (Total 40 Sessions)

Tentative Schedule
Tentative Lecture Notes and References

Week 1 (05/09, 06/09)

Introduction, Economics Basics

Slides: Course Overview, WNP-Ch1, WNP-Ch3

Home Reading: WNP (Chapters 1-3), Reference 2 (Chapter 1, Section 2.1)

Khan Academy Videos: Supply, Demand, and Market Equlibrium, Elasticity, Marginal Utility, Budget Lines, Indifference Curve

Week 2 (12/09, 13/09)

Social Optimal Pricing

WNP-Ch4 (Theory)

Home Reading: WNP (Section 4.1), Reference 9 (Relevant sections in Chapters 2 - 5)

Week 3 (19/09, 20/09)

Social Optimal Pricing

Continue the discussions from last week

Week 4 (26/09, 27/09)

Social Optimal Pricing, Monopoly Pricing and Price Discrimination

WNP-Ch4 (Applications), WNP-Ch5 (Theory)

Home Reading: WNP (Sections 4.2, 4.3, 5.1, 5.2), Reference 12, Reference 9 (Chapter 9), Reference 10 (Chapter 3), Reference 11 (Chapter 3)

Week 5 (03/10, 04/10)

Monopoly Pricing and Price Discrimination

WNP-Ch5 (Application)

Home Reading: WNP Chapter 5

Week 6 (10/10, 11/10)

Static and Dynamic Games

WNP-Ch6 (Theory 1)

Home Reading: WNP Chapter 6.1, NetEase Online Course

Week 7 (18/10)

(17/10 no class due to public holiday)

Static and Dynamic Games

WNP-Ch6 (Theory 2)

Home Reading: WNP Chapter 6.1, NetEase Online Course

Week 8 (24/10, 25/10)

Static and Dynamic Games, Student Paper Presentation

Same slides as last week

Week 9 (31/10, 01/11)

Oligopoly, Student Paper Presentation

WNP-Ch6 (Theory 3)

Home Reading: WNP Chapter 6.2, NetEase Online Course

Week 10 (07/11, 08/11)

Oligopoly, Student Paper Presentation

WNP-Ch6 (Application)

Home Reading: WNP Chapter 6.3

Week 11 (14/11)

(15/11 no class due to graduation ceremony)

Guest Lecture

Sharing Economy

Week 12 (21/11, 22/11)

Advaned Game Model, Network Externality

Advanced Game Model, WNP-Ch7 (Theory)

Week 13 (28/11, 29/11)

Project Presentation Both 28/11 and 29/11 classes will be 2:30-4:15pm

Homework and Solutions (all homework due 10pm in Blackboard system)

You are encouraged to discuss with classmates regarding the homework. However, everyone has to submit his/her own homework solution independently, and explicit acknowlege the help from others due to discussions. All homework submission are done through emails. If you handwrite your homework, you can use many free or cheap scan apps (for example, Scanbot for both iOS and Android, no commercial relationship with me) to scan and turn the document into a single PDF file. Except the first homework, all later homework should be submitted online through the Blackboard system.

  Due Date
Homework 1 Sept 17 (Monday)
Email TA your information (with Subject "[IERG5330] HW1"), including your Chinese Name, English name (if any), Department, Program of Study (PhD/MPhil/MSc), Year of Study, a Recent Photo, and why you take this course.
Homework 2 September 30 (Sunday) WNP, Section 4.5, Excercises 1, 2, 3. Submit through the Blackboard system (no email submission accepted). Due 10pm.
Homework 3 October 15 (Monday) WNP, Section 5.6, Excercises 1, 2.
Homework 4 November 5 (Monday) Pick a paper from the list of "Recommended Papers for Out-of-class Reading", and write a paper review. If you have not done this before, please follow the guidelines from here. The review should be no less than 1/2 page and no more than 1 page. We will grade you on both the clarity of presentation and the quality of your comments and suggestions.
Homework 5 November 19 (Monday) WNP, Section 6.6, Exercises 1, 2.


Paper Reading and Presentation

The list of recommended readings

Paper presentation schedule

The list contains two parts: the list for in-class presentation and the list for after-class reading. The division between the two lists is somewhat arbitrary; the key consideration is to ensure that there is a balance list of papers for in-class presentation so we will experience different topics. The purpose of the lists is to provide a starting point for students to examine existing theory and applications of network economics, and to provide some inspirations of possible course projects. The list is by no means exhaustive; so please feel free to explore deeper based on your research interests.

Project Milestones
Grade Percentage (total 20%)
By September 28 (Friday)

Please email your names (of all four group members) and the top three paper choices (in the decreasing order of preferences) to TA (tangmingscu [a] All emails received by September 24 will be treated with equal priorities. Emails received between September 25 and September 28 will be arranged based on the first-come-first-serve principle. Students who do not indicate preferences by September 28 will be randomly grouped and assigned papers.

In-Class (schedule) Each group need to send the finalized slides to the TA one day ahead of the presentation time. The presentation will be 20 mins per group (5 mins per student), followed by 5 mins of Q & A. The grade will be based on slides (5%), presentation (10%), and handling of tough questions (5%).

Tips for presentation:

  • Clear description of the model and key contributions
  • Clean summary of the optimization, econmics, and game theoretical models
  • Highlights of the most interesting parts
  • Do not tell us everything; do not expect us to remember a list of notations.
  • Keep the presentation concise and to the point.
  • Emphasize no more than three take-home messages at the beginning, in the middle, and at the end
  • Tell us how this paper can be improved
  • Respect the time limit


Project Presentation Schedule

A project involves four students. The project needs to involve significant amount of innovation in either of the following forms:

  • Option A: A system research: build a system of network economics, involving market survey, system building, and end user testing. The idea can come from an existing paper.
  • Option B: Formulate and solve a new network economics problem.

Here are the project milestones. Please email your submission to the TA. All four reports should be double-column, single space, 10pt, pdf format. No WORD format, please.

Project Milestones
Grade Percentage (total 35%)
October 29 (Monday)
Describe your choice of project, together with a preliminary proposal. No more than 2 pages. Email TA with the subject of "[5330 Project]: Proposal".
November 26 (Monday) Submit the complete results (no more than 5 pages), clealy emphasize which parts are your own contributions. Email the TA with the subject of "[5330 Project]: Complete Results".
November 28/29 (In-Class) Project presentation
December 3 (Monday) Submit final project report (no more than 6 pages), clealy emphasize which parts are your own contributions. Email the TA with the subject of "[5330 Project]: Final Report".

Peer Evaluation

Both paper presentation and project are based on a group of 4 students. To ensure that every group member tries his/her best to contribute, we will implement the "Intra-Group Peer Evaluation" mechanism. More specifically, both the paper presentation and project final scores will depend on how your group members view your contributions. Take the project as an example. Each group member will be asked to provide a peer evaluation to the other group members in terms of percentage of contributions (excluding his/her own contribution), with the total percentage equal to 100%. For example, an intra-group evaluation of a Student B in a four-person group can be (Student A: 30%; Student B: SELF; Student C: 30%; Student D: 40%). After the evaluation, each group member will receive three peer evaluations (from his/her other three group mates), and his/her final project grade will be Overall Project Grade x Summation of Peer Evaluations.