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The Case for Formation of ISP-Content Providers Consortiums by Nash Bargaining for Internet Content Delivery

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  • Debasis Mitra
  • Abhinav Sridhar

Abstract

The formation of consortiums of a broadband access Internet Service Provider (ISP) and multiple Content Providers (CP) is considered for large-scale content caching. The consortium members share costs from operations and investments in the supporting infrastructure. Correspondingly, the model's cost function includes marginal and fixed costs; the latter has been important in determining industry structure. Also, if Net Neutrality regulations permit, additional network capacity on the ISP's last mile may be contracted by the CPs. The number of subscribers is determined by a combination of users' price elasticity of demand and Quality of Experience. The profit generated by a coalition after pricing and design optimization determines the game's characteristic function. Coalition formation is by a bargaining procedure due to Okada (1996) based on random proposers in a non-cooperative, multi-player game-theoretic framework. A necessary and sufficient condition is obtained for the Grand Coalition to form, which bounds subsidies from large to small contributors. Caching is generally supported even under Net Neutrality regulations. The Grand Coalition's profit matches upper bounds. Numerical results illustrate the analytic results.

Suggested Citation

  • Debasis Mitra & Abhinav Sridhar, 2018. "The Case for Formation of ISP-Content Providers Consortiums by Nash Bargaining for Internet Content Delivery," Papers 1810.10660, arXiv.org.
    • Handle: RePEc:arx:papers:1810.10660
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    References listed on IDEAS

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    1. Okada, Akira, 1996. "A Noncooperative Coalitional Bargaining Game with Random Proposers," Games and Economic Behavior, Elsevier, vol. 16(1), pages 97-108, September.
    2. Kartik Hosanagar & John Chuang & Ramayya Krishnan & Michael D. Smith, 2008. "Service Adoption and Pricing of Content Delivery Network (CDN) Services," Management Science, INFORMS, vol. 54(9), pages 1579-1593, September.
    3. Panzar, John C., 1989. "Technological determinants of firm and industry structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 1, pages 3-59, Elsevier.
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    Cited by:

    1. Turgut Erkul & Sencer Ecer, 2022. "Net Neutrality in the Content Provision and Internet Service Provision Markets," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-2), pages 689-724, December.

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