  LTE-U is an extension of the Long Term Evolution (LTE) standard for operation
in unlicensed spectrum. LTE-U differs from WiFi, the predominant technology
used in unlicensed spectrum in that it utilizes a duty cycle mode for accessing
the spectrum and allows for a more seamless integration with LTE deployments in
licensed spectrum. There have been a number of technical studies on the
co-existence of LTE-U and WiFi in unlicensed spectrum In this paper, we instead
investigate the impact of such a technology from an economic perspective. We
consider a model in which an incumbent service provider (SP) deploys a duty
cycle-based technology like LTE-U in an unlicensed band along with operating in
a licensed band and competes with one or more entrants that only operate in the
unlicensed band using a different technology like WiFi. We characterize the
impact of a technology like LTE-U on the market outcome and show that the
welfare impacts of this technology are subtle, depending in part on the amount
of unlicensed spectrum and number of entrants. The difference in spectral
efficiency between LTE and WiFi also plays a role in the competition among SPs.
Finally, we investigate the impact of the duty cycle and the portion of
unlicensed spectrum used by the technology.
