A result similar to the Odlyzko's "Paris Metro Pricing"

Marin de Montmarin, Maxime de

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%T A result similar to the Odlyzko's "Paris Metro Pricing"
%A Marin de Montmarin, Maxime de
%J Applied Economics
%N 15
%P 1821-1824
%V 38
%D 2006
%K Congestion; Internet Service Providers
%= 2011-10-17T13:36:00Z
%~ http://www.peerproject.eu/
%> https://nbn-resolving.org/urn:nbn:de:0168-ssoar-238967
%X 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.
%C USA
%G en
%9 journal article
%W GESIS - http://www.gesis.org
%~ SSOAR - http://www.ssoar.info