Competition among providers in loss networks

Patrick Maillé () and Bruno Tuffin ()
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Patrick Maillé: RSM - Département Réseaux, Sécurité et Multimédia - UEB - Université européenne de Bretagne - European University of Brittany - Télécom Bretagne - IMT - Institut Mines-Télécom [Paris]
Bruno Tuffin: DIONYSOS - Dependability Interoperability and perfOrmance aNalYsiS Of networkS - Centre Inria de l'Université de Rennes - Inria - Institut National de Recherche en Informatique et en Automatique - IRISA-D2 - RÉSEAUX, TÉLÉCOMMUNICATION ET SERVICES - IRISA - Institut de Recherche en Informatique et Systèmes Aléatoires - UR - Université de Rennes - INSA Rennes - Institut National des Sciences Appliquées - Rennes - INSA - Institut National des Sciences Appliquées - UBS - Université de Bretagne Sud - ENS Rennes - École normale supérieure - Rennes - Inria - Institut National de Recherche en Informatique et en Automatique - Télécom Bretagne - CentraleSupélec - CNRS - Centre National de la Recherche Scientifique

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Abstract: Communication networks are becoming ubiquitous and more and more competitive among revenue-maximizing providers, operating on potentially different technologies. In this paper, we propose to analyze thanks to game theory the competition of providers playing with access prices and fighting for customers. Considering a slotted-time model, the part of demand exceeding capacity is lost and has to be resent. We consider an access price for submitted packets, thus inducing a congestion pricing through losses. Customers therefore choose the provider with the cheapest average price per correctly transmitted unit of traffic. The model is a two-level game, the lower level for the distribution of customers among providers, and the upper level for the competition on prices among providers, taking into account what the subsequent repartition at the lower level will be. We prove that the upper level has a unique Nash equilibrium, for which the user repartition among different available providers is also unique, and, remarkably, efficient in the sense of social welfare (with a so-called price of anarchy equal to one). Moreover, even when adding a higher level game on capacity disclosure with a possibility of lying for providers, providers are better off being truthful, and the unique Nash equilibrium is thus unchanged.

Keywords: Game theory; Wireless networks; Pricing; Shared spectrum; Wardrop equilibrium (search for similar items in EconPapers)
Date: 2011-06
Note: View the original document on HAL open archive server: https://hal.science/hal-00724665v1
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Citations: View citations in EconPapers (1)

Published in Annals of Operations Research, 2011, 199 (1), pp.3-22. ⟨10.1007/s10479-011-0914-3⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00724665

DOI: 10.1007/s10479-011-0914-3

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