Mobile Edge Computing (MEC) pushes computing functionalities away from the centralized cloud to the proximity of data sources, thereby reducing service provision latency and saving backhaul network bandwidth. Although computation offloading has been extensively studied in the literature, service caching is an equally, if not more, important design topic of MEC, yet receives much less attention. Service caching refers to caching application services and their related data (libraries/databases) in the edge server, e.g. MEC-enabled Base Station (BS), enabling corresponding computation tasks to be executed. Since only a small number of services can be cached in resource-limited edge server at the same time, which services to cache has to be judiciously decided to maximize the system performance. In this paper, we investigate collaborative service caching in MEC-enabled dense small cell (SC) networks. We propose an efficient decentralized algorithm, called CSC (Collaborative Service Caching), where a network of small cell BSs optimize service caching collaboratively to address a number of key challenges in MEC systems, including service heterogeneity, spatial demand coupling, and decentralized coordination. Our algorithm is developed based on parallel Gibbs sampling by exploiting the special structure of the considered problem using graphing coloring. The algorithm significantly improves the time efficiency compared to conventional Gibbs sampling, yet guarantees provable convergence and optimality. CSC is further extended to the SC network with selfish BSs, where a coalitional game is formulated to incentivize collaboration. A coalition formation algorithm is developed by employing the merge-and-split rules and ensures the stability of the SC coalitions.