Intra-backbone and Inter-backbone Peering Among Internet Service Providers

Narine Badasyan and Subhadip Chakrabarti
Additional contact information
Narine Badasyan: Virginia Polytechnic & State University

Microeconomics from University Library of Munich, Germany

Abstract: We consider a model with two backbones and a finite number of Internet Service Providers (ISPs) connected to the backbones. ISPs decide on private peering agreements, comparing the benefits of private peering to costs. Intra-backbone peering refers to peering between ISPs connected to the same backbone, whereas inter-backbone peering refers to peering between ISPs connected to different backbones. We formulate the model as a two-stage game. In the first stage, ISPs decide on peering agreements. In the second stage they compete in prices a la Bertrand. We examine the effects of peering on profits of ISPs. Peering affects profits through two channels - reduction of backbone congestion which we call the symmetric effect and ability to send traffic bypassing or circumventing congested backbones which we call the asymmetric effect. The first has a negative or ambiguous effect while the second has a generally positive effect on firm profits. The two often act against each other making the net effect ambiguous. We also conduct simulations to determine pairwise stable peering configurations in a six-provider model and find that there is a paucity of inter-backbone peering in asymmetric settings.

Keywords: Peering; Networks (search for similar items in EconPapers)
JEL-codes: D21 D43 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2004-07-12
New Economics Papers: this item is included in nep-net
Note: Type of Document - pdf; pages: 29
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0407/0407006.pdf (application/pdf)

Related works:
Working Paper: Intra-backbone and Inter-backbone Peering Among Internet Service Providers (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0407006

Access Statistics for this paper

More papers in Microeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA (volker.schallehn@ub.uni-muenchen.de this e-mail address is bad, please contact repec@repec.org).