A duopoly pricing model under congestion-sensitive end-users

Abstract

In this paper we study a duopoly pricing model under congestion-sensitive end-users by investigating a two access point (AP) providers' price competition in a Wireless Mesh Network (WMN). The two AP providers resale IP-based service for possibly different prices and quality-of-service (QoS) to the end-users. The interactions among the two AP providers and their end-users are modeled using a two stage noncooperative game. In Stage 1, the AP providers set their prices to maximize their individual profits respectively. In Stage 2, given the price and QoS combinations offered by both AP providers, the endusers decide which AP to seek service from or opt out of both APs. Then the game returns to Stage 1, in which both AP providers adjust their optimal prices based on the decisions of the endusers to seek equilibrium among themselves and their end-users. With this game theoretical approach, we develop an analytical framework to identify the Nash equilibrium prices.