Interaction between a content provider and a service provider and its efficiency

We study the interaction between a service provider (SP) and a content provider (CP) when the SP can provide higher quality-of-service (QoS) to content service under a private agreement with the CP. We model the interaction between the providers both as a Stackelberg game and as a two-person bargaining problem in order to understand how the relative bargaining power of these providers affects the resulting QoS and social efficiency. Our findings suggest that the social efficiency is identical under both the two-person bargaining problem model and the Stackelberg game model regardless of which provider is the leader with a stronger bargaining position. In addition, we prove that, under a mild technical condition, the QoS at Nash equilibrium and Nash bargaining solution improves as the contract duration increases.