Competitive Spectrum Trading in Dynamic Spectrum Access Markets: A Price War

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.