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‘Unfair’ Discrimination in Two-sided Peering? Evidence from LINX

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  • D’Ignazio, A.
  • Giovannetti, E.

Abstract

Does asymmetry between Internet Providers affect the “fairness” of their interconnection contracts? While recent game theoretic literature provides contrasting answers to this question, there is a lack of empirical research. We introduce a novel dataset on micro-interconnection policies and provide an econometric analysis of the determinants of peering decisions amongst the Internet Service Providers interconnecting at the London Internet Exchange Point (LINX). Our key result shows that two different metrics, introduced to capture asymmetry, exert opposite effects. Asymmetry in “market size” enhances the quality of the link, while asymmetry in “network centrality” induces quality degradation, hence “unfairer” interconnection conditions.

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File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/cwpe0621.pdf
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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0621.

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Length: 23
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:cam:camdae:0621

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Web page: http://www.econ.cam.ac.uk/index.htm

Related research

Keywords: Internet Peering; Two-sided Markets; Network Industries; Antitrust;

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  1. Matthew O. Jackson & Asher Wolinsky, 1995. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Narine Badasyan & Subhadip Chakrabarti, 2003. "Private Peering Among Internet Backbone Providers," Microeconomics 0301003, EconWPA.
  3. Martin B. Weiss & Seung Jae Shin, 2004. "Internet Interconnection Economic Model and its Analysis: Peering and Settlement," Netnomics, Springer, vol. 6(1), pages 43-57, 04.
  4. Thorsten Wichmann & Pio Baake, 1998. "On the Economics of Internet Peering," Berlecon Research Papers 0004, Berlecon Research.
  5. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  6. Cremer, Jacques & Rey, Patrick & Tirole, Jean, 2000. "Connectivity in the Commercial Internet," Journal of Industrial Economics, Wiley Blackwell, vol. 48(4), pages 433-72, December.
  7. Foros, Oystein & Kind, Hans Jarle & Sorgard, Lars, 2002. "Access Pricing, Quality Degradation, and Foreclosure in the Internet," Journal of Regulatory Economics, Springer, vol. 22(1), pages 59-83, July.
  8. Giovannetti, Emanuele, 2002. "Interconnection, differentiation and bottlenecks in the Internet," Information Economics and Policy, Elsevier, vol. 14(3), pages 385-404, September.
  9. Foros, Oystein & Hansen, Bjorn, 2001. "Competition and compatibility among Internet Service Providers," Information Economics and Policy, Elsevier, vol. 13(4), pages 411-425, December.
  10. Mason, R., 1999. "Compatibility between differentiated networks," Discussion Paper Series In Economics And Econometrics 9909, Economics Division, School of Social Sciences, University of Southampton.
  11. Takanori Ida, 2005. "Analysis of Internet topology with a three-level components model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(8), pages 527-534.
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