Network Dimensioning Games in Competitive Business Environments

Helio Waldman; Rodrigo C. Bortoletto
This paper presents a game-theoretical framework for network capacity planning strategies in competitive business environments. For this purpose, two operators are assumed to provide communication channels to a large population of users for the same price. Users will then play a game in which they try to forward their requests to the operator that will give them the lowest blocking probability. The paper discusses the equilibria resulting from some distinct user strategies. The traffic partition resulting from the user’s game is an input to the operators game, in which operators try do dimension their network capacities in order to maximize their profits. In the presence of asymmetries between the channel deployment costs of both operators, we show that the operator’s game will not lead to an equilibrium between pure dimensioning strategies, resulting in looping instabilities in settings where the players alternate their profit-maximizing moves. In this case, the model provides the cost asymmetry needed for an entrant to challenge the market dominance of an incumbent operator.
Telecommunication Networks; Network Dimensioning; Competitive Dynamics; Game-theory; Blocking Probability; Markovian Model; Nash Equilibrium
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