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A result similar to the Odlyzko's "Paris Metro Pricing"
[Zeitschriftenartikel]
Abstract We investigate the two-stage competition in which two Internet
Service Providers chosse sequentially their capacities and
then their prices while facing a flow of new customers who decide
to belong to one ISP or the other on the basis of a comparison
of access prices and of expected congestion rates... mehr
We investigate the two-stage competition in which two Internet
Service Providers chosse sequentially their capacities and
then their prices while facing a flow of new customers who decide
to belong to one ISP or the other on the basis of a comparison
of access prices and of expected congestion rates. At the
equilibrium of the game a vertical differentiation between the Internet
Service Providers endogenously emerges: the firm which
provides the larger network has the lowest rate of congestion and
the highest access price. The I.S.P providing the smallest network
(thus the most congested) earns the larger profit. It will
be noticed that the spontaneous functioning of oligopolistic competition
produces a result similar to the Odlyzko's "Paris Metro
Pricing": at the equilibrium the two competitors propose different
prices and rates of congestion, the most expensive one being
also the least congested.... weniger
Klassifikation
Wirtschaftssektoren
Betriebswirtschaftslehre
Freie Schlagwörter
Congestion; Internet Service Providers
Sprache Dokument
Englisch
Publikationsjahr
2006
Seitenangabe
S. 1821-1824
Zeitschriftentitel
Applied Economics, 38 (2006) 15
DOI
https://doi.org/10.1080/00036840500426967
Status
Postprint; begutachtet (peer reviewed)
Lizenz
PEER Licence Agreement (applicable only to documents from PEER project)