Network Formation in Peering

Philipp Servatius ()
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Philipp Servatius: Université de Fribourg

Chapter Chapter 6 in Network Economics and the Allocation of Savings, 2012, pp 235-267 from Springer

Abstract: Abstract This chapter revolves around the process of network formation among VoIP firms. Under which conditions will the firms enter peering agreements and what will the resulting cooperation network look like? We apply a number of different approaches, not only with respect to the modus operandi of network formation, but also with regard to the general settings in which the firms operate. Each such situation is analyzed from two polar viewpoints regarding the access fees. In one scenario, we ignore any changes to access revenues, regardless of peering, while in the other we presume that access fees are dropped completely, once peering is agreed upon. Our goal is to find a simple, transparent and realistic access charge regime under which all VoIP firms have the incentive to peer with as many of others as possible. This is also in the best interest of a regulator, as it promotes the transition to comprehensive NGN infrastructure, leaving behind the need to consider multiple types of networks (see European Regulators Group 2009).

Keywords: Nash Equilibrium; Payoff Function; Network Formation; Equilibrium Strategy; Allocation Rule (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-642-21096-9_6

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DOI: 10.1007/978-3-642-21096-9_6

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