Connectivity in the Commercial Internet
We study the "backbone market" in the Internet. After discussing the structure of the Internet, we use an extension of the Katz-Shapiro network model to analyze the strategies that would be used by dominant backbone. We show that a larger backbone prefers a lower quality interconnection than the smaller one. We then analyze a "targeted degradation" strategy where the larger backbone lowers the quality of interconnection to its smaller rivals in turn. Finally, we show that the qualitative results are robust to the possibility of "multihoming" by clients. Copyright 2000 by Blackwell Publishing Ltd
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| Length: | |
| Date of creation: | 1999 |
| Date of revision: | 2000 |
| Publication status: | Published in The Journal of Industrial Economics, vol. 48, n. 4, December 2000, p. 433-472. |
| Handle: | RePEc:ide:wpaper:1225 |
| Contact details of provider: | Postal: Manufacture des Tabacs, Aile Jean-Jacques Laffont, 21 Allée de Brienne, 31000 TOULOUSE Phone: +33 (0)5 61 12 85 89 Fax: + 33 (0)5 61 12 86 37 Web page: http://www.idei.fr/ Email: More information through EDIRC
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References listed on IDEAS
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- Shenker, Scott & Clark, David & Estrin, Deborah & Herzog, Shai, 1996. "Pricing in computer networks: Reshaping the research agenda," Telecommunications Policy, Elsevier, vol. 20(3), pages 183-201, April.
- Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
- Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
- Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
- Innes, Robert & Sexton, Richard J., 1993. "Customer coalitions, monopoly price discrimination and generic entry deterrence," European Economic Review, Elsevier, vol. 37(8), pages 1569-1597, December.
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