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Do internet incumbents choose low interconnection quality?

Foros, Øystein; Kind, Hans Jarle; Sand, Jan Yngve
Working paper
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URI
http://hdl.handle.net/11250/165488
Date
2004-06
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  • Working papers (SNF) [809]
Abstract
In this paper we analyze the interconnection incentives for two networks that differ with respect to size of their installed based. In the first part we prove that the smaller firm may be harmed in competition for new customers if the installed base customers pay a high price. In the second part we assume that the interconnection quality to customers in the installed bases is set before the interconnection quality to new customers. We show that both firms prefer perfect interconnection quality to new customers if the installed base interconnection quality is sufficiently high, and we discuss what policy implications this may have.
Publisher
SNF
Series
Working Paper
2004:20

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