  We consider the economics of the interaction between Mobile Virtual Network
Operators (MVNOs) and Mobile Network Operators (MNOs). We investigate the
incentives of an MNO for offering some of her resources to an MVNO instead of
using the resources for her own End-Users (EUs). We consider a market with one
MNO and one MVNO, and a continuum of undecided EUs. Two cases for EUs are
considered: (i) when EUs need to choose either the MNO or the MVNO, and (ii)
when EUs have an outside option. In each of these cases, we consider a
non-cooperative framework of sequential game and a cooperative framework of
bargaining game. We characterize the Subgame Perfect Nash Equilibria (SPNE) and
Nash Bargaining Solution (NBS) of the sequential and bargaining games,
respectively. We show that in the non-cooperative framework, SPNE assumes two
forms: (i) the MNO invests minimally on her infrastructure and the MVNO leases
all the newly invested resources and (ii) the MNO invests more on her
infrastructure, the MVNO leases only part of these resources to the MVNO, and
the MNO uses the rest herself to attract EUs. Thus, in both, the MNO generates
revenue indirectly through the MVNO. In addition to that, in (ii), the MNO
generates revenue directly from the EUs. We also prove that in the bargaining
framework, the MVNO either reserves all the resources or no resources from the
MNO, and the MNO's investments are guided by whether EUs have an outside
option. If they don't, then the MNO invests as little as possible on her
infrastructure. If they do, then the MNO invests more.
