Author(s)
Zongyun Xie and Randall Berry
Abstract
In shared spectrum environments, security is a critical concern where attacks can degrade service and influence market interactions between competing service providers (SPs). This creates incentives for SPs to make strategic investments in security to maximize their own utility, either by protecting their own bandwidth or redirecting the attack to a competitor. This research examines the market outcomes of attacks and security investments by modeling the interaction between two SPs and an attacker as a three-stage game. We analyze two scenarios for the SPs’ investment decisions: a simultaneous (Cournot) game and a sequential (Stackelberg) game. The results indicate that in the simultaneous case, competition can lead to a situation where no equilibrium exists, while the sequential game always guarantees the existence of an equilibrium. A key finding in both models is that competition can result in an over-investment in security. These findings offer insights into how investment cost, attack uncertainty, and risk aversion impact market outcomes in shared spectrum markets.