---
created_at: '2016-11-23T08:59:55.000Z'
title: The economics of the Internet backbone (2004) [pdf]
url: https://ideas.repec.org/p/net/wpaper/0423.html
author: vmarsy
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# The Economics of the Internet Backbone

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# The Economics of the Internet Backbone

* [Author & abstract][21]
* [Download & other version][22]
* [1 Citations][23]
* [Related works & +][24]
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## Author

Listed: 

* [Nicholas Economides][26]

() (Stern School of Business, NYU)

[Registered:][17]

* [Nicholas S. Economides ][27]

## Abstract

This paper discusses the economics of the Internet backbone. I discuss competition on the Internet backbone as well as relevant competition policy issues. In particular, I show how public protocols, ease of entry, very fast network expansion, connections by the same Internet Service Provider ("ISP") to multiple backbones (ISP multi-homing), and connections by the same large web site to multiple ISPs (customer multi-homing) enhance price competition and make it very unlikely that any firm providing Internet backbone connectivity would find it profitable to degrade or sever interconnection with other backbones in an attempt to monopolize the Internet backbone.

## Suggested Citation

* Nicholas Economides, 2004. "[**The Economics of the Internet Backbone][28]**," [Working Papers][29] 04-23, NET Institute, revised Oct 2004. 
Handle: _RePEc:net:wpaper:0423_

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## Download full text from publisher

**File URL:** http://www.netinst.org/ECONOMICS_OF_THE_INTERNET_BACKBONE.pdf  
**Download Restriction:** no  

## Other versions of this item:

* Nicholas Economides, 2004. "[**The Economics of the Internet Backbone][30]**," [Working Papers][31] 04-29, New York University, Leonard N. Stern School of Business, Department of Economics. 

## References listed on IDEAS

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1. Donald Alexander & Robert Feinberg, 2004. "[**Entry in Local Telecommunication Markets][32]**," [Review of Industrial Organization][33], Springer;The Industrial Organization Society, vol. 25(2), pages 107-127, June. 
2. T. Randolph Beard & David L. Kaserman & John W. Mayo, 2003. "[**A Graphical Exposition of the Economic Theory of Regulation][34]**," [Economic Inquiry][35], Western Economic Association International, vol. 41(4), pages 592-606, October. 
3. Garbacz, Christopher & Thompson, Herbert G, 2002. "[**Estimating Telephone Demand with State Decennial Census Data from 1970-1990][36]**," [Journal of Regulatory Economics][37], Springer, vol. 21(3), pages 317-329, May. 
4. H. Cremer & F. Gasmi & A. Grimaud & J. J. Laffont, 2001. "[**Universal Service: An economic perspective][38]**," [Annals of Public and Cooperative Economics][39], Wiley Blackwell, vol. 72(1), pages 5-43, March. 
5. Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2000. "[**Universal service obligations and competition][40]**," [Information Economics and Policy][41], Elsevier, vol. 12(3), pages 249-259, September. 

    * Anne Perrot & Laurent Flochel & Philippe Choné, 2000. "[**Universal service obligations and competition][42]**," [Post-Print][43] halshs-00144073, HAL. 

6. Carlos Martins-Filho & John W. Mayo, 1993. "[**Demand and Pricing of Telecommunications Services: Evidence and Welfare Implications][44]**," [RAND Journal of Economics][45], The RAND Corporation, vol. 24(3), pages 439-454, Autumn. 
7. Zolnierek, James & Eisner, James & Burton, Ellen, 2001. "[**An Empirical Examination of Entry Patterns in Local Telephone Markets][46]**," [Journal of Regulatory Economics][37], Springer, vol. 19(2), pages 143-159, March. 
8. Eriksson, Ross C & Kaserman, David L & Mayo, John W, 1998. "[**Targeted and Untargeted Subsidy Schemes: Evidence from Postdivestiture Efforts to Promote Universal Telephone Service][47]**," [Journal of Law and Economics][48], University of Chicago Press, vol. 41(2), pages 477-502, October. 
9. Rosston, Gregory L. & Wimmer, Bradley S., 2000. "[**The 'state' of universal service][49]**," [Information Economics and Policy][41], Elsevier, vol. 12(3), pages 261-283, September. 
10. Mueller, Milton, 1993. "[**Universal service in telephone history : A reconstruction][50]**," [Telecommunications Policy][51], Elsevier, vol. 17(5), pages 352-369, July. 
11. Barros, Pedro P. & Seabra, M. Carmo, 1999. "[**Universal service: does competition help or hurt?][52]**," [Information Economics and Policy][41], Elsevier, vol. 11(1), pages 45-60, March. 
12. Trevor R. Roycroft, 2005. "[**Empirical Analysis of Entry in the Local Exchange Market: The Case of Pacific Bell][53]**," [Contemporary Economic Policy][54], Western Economic Association International, vol. 23(1), pages 107-115, January. 
13. Lukasz Grzybowski, 2005. "[**Regulation of Mobile Telephony across the European Union: An Empirical Analysis][55]**," [Journal of Regulatory Economics][37], Springer, vol. 28(1), pages 47-67, July. 
14. Rosston, G.R. & Wimmer, B.S., 2000. "**[The "State" of Universal Service][56]**," [Papers][57] 99-018, United Nations World Employment Programme-. 
15. Wolak, Frank A., 1996. "**[Can universal service survive in a competitive telecommunications environment? Evidence from the United States consumer expenditure survey][58]**," [Information Economics and Policy][41], Elsevier, vol. 8(3), pages 163-203, September.  **[Full references** __][59] (including those not matched with items on IDEAS)

## Citations

Citations are extracted by the [CitEc Project][60], subscribe to its [RSS feed][61] for this item. 

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**Cited by:**

1. Christiaan Hogendorn, 2003. "**[Excessive(?) Entry of National Telecom Networks, 1990-2001][62]**," [Working Papers][29] 03-07, NET Institute. 

    * Christiaan Hogendorn, 2006. "**[Excessive(?) Entry of National Telecom Networks, 1990-2001][63]**," [Wesleyan Economics Working Papers][64] 2006-001, Wesleyan University, Department of Economics. 

##  More about this item

### Keywords

[Internet][65]; [network effects][66]; [Internet backbone][67]; [competition][68]; [monopoly][69]; [MCI][70]; [WorldCom][71]; 

### [JEL][14] classification:

* **[L12**][72] \- Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
* **[L13**][73] \- Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
* **[C63**][74] \- Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
* **[D42**][75] \- Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
* **[D43**][76] \- Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

### NEP fields

This paper has been announced in the following [NEP Reports][15]: 

* [NEP-ALL-2006-08-26][77] (All new papers)
* [NEP-ICT-2006-08-26][78] (Information & Communication Technologies)
* [NEP-MIC-2006-08-26][79] (Microeconomics)
* [NEP-NET-2006-08-26][80] (Network Economics)

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[Access and download statistics][81]

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