Abstract

Abstract—Motivated in part by the success of WiFi, there has been much interest in opening up new “prime ” bands of spectrum for unlicensed use. Such bands can lower the cost for new wireless service providers to enter a market. The increased competition could in turn improve economic welfare. However, the openness of such spectrum can also lead to it becoming over congested, which in turn could deter investment. Indeed, a recent paper shows that due to the risk of congestion, only a single service provider may invest in a given unlicensed band and charge monopoly prices. However, that paper considers only a single band of unlicensed spectrum. In this paper, we consider investment and competition when there are multiple unlicensed bands available. In such a setting, each service provider could either invest in a single band or spread its investment over multiple bands. We consider a two-stage game for such a setting, in which firms first decide investment levels and second compete for customers by announcing prices for their service. The equilibria and resulting welfare of this game are characterized. I.