Tighter Bounds on the Capacity of Finite-State Channels via Markov Set-Chains

The theory of Markov set-chains is applied to derive upper and lower bounds on the capacity of finite-state channels that are tighter than the classic bounds by Gallager. The new bounds coincide and yield single-letter capacity characterizations for a class of channels with the state process known at the receiver, including channels whose long-term marginal state distribution is independent of the input process. Analogous results are established for finite-state multiple access channels.