Interconnection, Differentiation and Bottlenecks in the Internet

Emanuele Giovannetti

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: In the Internet information packets are routed through many vertically related hops. However these network hierarchies are not fixed. Two providers can be simultaneously vertically related in a routing process as supplier and retailer, while horizontally competing in another. We study pricing and interconnection decisions when ISPs become interconnected into a wider network. We find that interconnection lowers retail and access prices when the downstream industry is poorly differentiated. The profitability of interconnection also depends on the differentiation of the retail sector. Interconnection is, however, universally agreed upon for an intermediate range of retail services differentiation values.

Keywords: Access Pricing; Internet; Network Industries; Interconnection (search for similar items in EconPapers)
JEL-codes: L13 L86 L96 (search for similar items in EconPapers)
Date: 2000-11
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Interconnection, differentiation and bottlenecks in the Internet (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0011

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