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Internet Peering as a Network of Relations

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  • Lippert, Steffen
  • Spagnolo, Giancarlo

Abstract

We apply results from recent theoretical work on networks of relations to analyze optimal peering strategies for asymmetric ISPs. It is shown that - from a network of relations perspective – ISPs’ asymmetry in bilateral peering agreements need not be a problem, since when these form a closed network, asymmetries are pooled and information transmission is faster. Both these effects reduce the incentives for opportunism in general, and interconnection quality degradation in particular. We also explain why bilateral monetary transfers between asymmetric ISPs (Bilateral Paid Peering), though potentially good for bilateral peering, may have rather negative effects on the sustainability of the overall peering network.

Suggested Citation

  • Lippert, Steffen & Spagnolo, Giancarlo, 2006. "Internet Peering as a Network of Relations," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 191, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:191
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    1. Spagnolo, Giancarlo & Lippert, Steffen, 2004. "Networks of Relations," SSE/EFI Working Paper Series in Economics and Finance 570, Stockholm School of Economics, revised 04 Jun 2010.
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    6. Lippert, Steffen & Spagnolo, Giancarlo, 2011. "Networks of relations and Word-of-Mouth Communication," Games and Economic Behavior, Elsevier, vol. 72(1), pages 202-217, May.
    7. Laffont, Jean-Jacques & Marcus, Scott & Rey, Patrick & Tirole, Jean, 2003. "Internet Interconnection and the Off-Net-Cost Pricing Principle," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 370-390, Summer.
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    1. Lippert, Steffen & Spagnolo, Giancarlo, 2011. "Networks of relations and Word-of-Mouth Communication," Games and Economic Behavior, Elsevier, vol. 72(1), pages 202-217, May.
    2. Foros, Øystein & Kind, Hans Jarle & Sand, Jan Yngve, 2009. "Entry may increase network providers' profit," Telecommunications Policy, Elsevier, vol. 33(9), pages 486-494, October.
    3. Alexei A. Gaivoronski & Per Jonny Nesse & Olai Bendik Erdal, 2017. "Internet service provision and content services: paid peering and competition between internet providers," Netnomics, Springer, vol. 18(1), pages 43-79, May.
    4. Emanuele Giovannetti & Karsten Neuhoff & Giancarlo Spagnolo, 2007. "Trust And Virtual Districts: Evidence From The Milan Internet Exchange," Metroeconomica, Wiley Blackwell, vol. 58(3), pages 436-456, July.
    5. Besen, Stanley M. & Israel, Mark A., 2013. "The evolution of Internet interconnection from hierarchy to “Mesh”: Implications for government regulation," Information Economics and Policy, Elsevier, vol. 25(4), pages 235-245.
    6. D’Ignazio, Alessio & Giovannetti, Emanuele, 2014. "Continental differences in the clusters of integration: Empirical evidence from the digital commodities global supply chain networks," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 486-497.
    7. López, Ángel Luis, 2011. "Asymmetric access pricing in the Internet backbone market," Economics Letters, Elsevier, vol. 112(1), pages 3-6, July.
    8. Giovannetti, Emanuele & Sigloch, Sebastian, 2015. "An Internet periphery study: Network centrality and clustering for mobile access in Bhutan," Telecommunications Policy, Elsevier, vol. 39(7), pages 608-622.
    9. D’Ignazio, Alessio & Giovannetti, Emanuele, 2015. "Predicting internet commercial connectivity wars: The impact of trust and operators’ asymmetry," International Journal of Forecasting, Elsevier, vol. 31(4), pages 1127-1137.

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