In the mobile communication services, users wish to subscribe to high quality service with a low price level, which leads to competition between mobile network operators (MNOs). The MNOs compete with each other by service prices after deciding the extent of investment to improve quality of service (QoS). Unfortunately, the theoretic backgrounds of price dynamics are not known to us, and as a result, effective network planning and regulative actions are hard to make in the competitive market. To explain this competition more detail, we formulate and solve an optimization problem applying the two-stage Cournot and Bertrand competition model. Consequently, we derive a price dynamics that the MNOs increase and decrease their service prices periodically, which completely explains the subsidy dynamics in the real world. Moving forward, to avoid this instability and inefficiency, we suggest a simple regulation rule which leads to a Pareto-optimal equilibrium point. Moreover, we suggest regulator's optimal actions corresponding to user welfare and the regulator's revenue.
The price war in communication service is observed in Yu - Kong . Particularly, in @cite_18 and @cite_15 , if one operator lowers its price to increase revenue or to monopolize the entire market, then the other operators will also lower their price to match the price leader. The price down competition will occur repeatedly among all operators, eventually damaging every operator with a revenue decrease.
@cite_18 @cite_15
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In this paper, we apply the game theory to study some strategic actions for retailers to fight a price war. We start by modeling a noncooperative pure pricing game among multiple competing retailers who sell a certain branded product under price-dependent stochastic demands. A unique Nash equilibrium is proven to exist under some mild conditions. We demonstrate mathematically the incentives for retailers to start a price war. Based on a strategic framework via the game theory, we illustrate the use of service level to build price walls which can prevent a huge drop in price, as well as profit. Three kinds of price walls are proposed, and the respective strengths and weaknesses have been studied. Analytical conditions, under which a price wall can effectively prevent big drops in both market share and profit, are developed. Aside from the proposed price walls, two other pricing strategies, which can lead to an all-win situation, are examined. The concept of dynamic spectrum access (DSA) enables the licensed spectrum to be traded in an open market where the unlicensed users can freely buy and use the available licensed spectrum bands. However, like in the other traditional commodity markets, spectrum trading is inevitably accompanied by various competitions and challenges. In this paper, we study an important business competition activity - price war in the DSA market. A non-cooperative pricing game is formulated to model the contention among multiple wireless spectrum providers for higher market share and revenues. We calculate the Pareto optimal pricing strategies for all providers and analyze the motivations behind the price war. The potential responses to the price war are in-depth discussed. Numerical results demonstrate the efficiency of the Pareto optimal strategy for the game and the impact of the price war to all participants.