Endogenous Internet Structure and Bargaining Power in Interconnection Agreements

Jun Tackseung, Jeong-Yoo Kim and Kim Hee-Su

Review of Network Economics, 2010, vol. 9, issue 3, 43

Abstract: We consider a model of Internet interconnection. We characterize the Myerson value as the bargaining outcome in interconnection agreements in given networks and provide its interpretation in terms of "betweenness centrality." Then, in an extended network formation model, we characterize the structures of the efficient network and the stable network and confirm the disparity between them. We also identify the condition for the disparity to disappear under bill-and-keep agreements. The possibility of multi-homing and secondary peering is briefly discussed.

Keywords: endogenous network formation; Myerson value; centrality; Internet interconnection (search for similar items in EconPapers)
Date: 2010
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DOI: 10.2202/1446-9022.1202

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