Femtocell Operator Entry Decision with Spectrum Bargaining and Service Competition

This paper analyzes the effect of the entry of a femtocell operator into a mobile communications market where a macrocell operator exists. The analysis is conducted using a game-theory-based model, specifically a three-level multi leader-follower game, where different solution concepts are applied: Shapley value, Nash equilibrium and Wardrop equilibrium. It aims to answer the question of which benefit mobile communication users get from the entry of a femtocell operator into the market. The equilibrium is assessed from the point of view of each agent (e.g. profits and utilities), and of the whole (e.g. social welfare). A case for regulatory intervention is made.