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On the Economics of Internet Peering

Author

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  • Thorsten Wichmann

    () (Berlecon Research)

  • Pio Baake

    (Humboldt-University)

Abstract

We discuss economic rationales behind peering decisions in the Internet. In We discuss economic rationales behind peering decisions in the Internet. In the first part of the paper we analyze the decision about a bilateral peering agreement between two commercial Internet service providers (ISPs) who are in Cournot competition. In the second part we discuss multilateral peer-ing between commercial ISPs and an academic research network (ARN). The latter is organized as club of academics who share the cost of their net-work. It is discussed whether peering threatens the existence of the ARN and under what circumstances a commercial ISP would want to use strate-gic pricing to win all ARN-members as customers.

Suggested Citation

  • Thorsten Wichmann & Pio Baake, 1998. "On the Economics of Internet Peering," Berlecon Research Papers 0004, Berlecon Research.
  • Handle: RePEc:ber:bertw1:0004
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    References listed on IDEAS

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    1. Lee McKnight & Joseph P. Bailey, 1997. "Global Internet Economics," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
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    Cited by:

    1. D'Ignazio, Alessio & Giovannetti, Emanuele, 2009. "Asymmetry and discrimination in Internet peering: evidence from the LINX," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 441-448, May.
    2. D’Ignazio, A. & Giovannetti, E., 2006. "‘Unfair’ Discrimination in Two-sided Peering? Evidence from LINX," Cambridge Working Papers in Economics 0621, Faculty of Economics, University of Cambridge.
    3. Jahn, Eric & Prüfer, Jens, 2008. "Interconnection and competition among asymmetric networks in the Internet backbone market," Information Economics and Policy, Elsevier, vol. 20(3), pages 243-256, September.
    4. Lippert, Steffen & Spagnolo, Giancarlo, 2008. "Internet peering as a network of relations," Telecommunications Policy, Elsevier, vol. 32(1), pages 33-49, February.
    5. Anna Nagurney & Dong Li & Tilman Wolf & Sara Saberi, 2013. "A network economic game theory model of a service-oriented internet with choices and quality competition," Netnomics, Springer, vol. 14(1), pages 1-25, November.
    6. Giovannetti, E. & Neuhoff, K. & Spagnolo, G., 2005. "Agglomeration in Internet Co-operation Peering Agreements," Cambridge Working Papers in Economics 0505, Faculty of Economics, University of Cambridge.
    7. D'Ignazio, A. & Giovannetti, E., 2004. "From Exogenous to Endogenous Networks: Internet Applications," Cambridge Working Papers in Economics 0445, Faculty of Economics, University of Cambridge.
    8. Gireesh Shrimali, 2010. "Competitive resource sharing by Internet Service Providers," Netnomics, Springer, vol. 11(2), pages 149-179, July.
    9. Sun Me Choi & Christian Fernando Libaque-Saenz & Sang-woo Lee & Myeong-Cheol Park, 2016. "Margin squeeze in the Internet backbone interconnection market: a case study of Korea," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 61(3), pages 531-542, March.
    10. Ioanna D. Constantiou & Nikolaos A. Mylonopoulos, 2002. "Towards Sustainable Quality Of Service In Interconnection," Game Theory and Information 0207004, University Library of Munich, Germany, revised 02 Sep 2002.

    More about this item

    Keywords

    Internet Economics; Interconnection Agreements;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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