Estimating market power in the Internet backbone. Using the IP transit Band-X database |
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Institution: | 1. Faculty of Economics, University of Cambridge and University of Rome “La Sapienza”, Austin Robinson Building, Sidgwick Avenue, Cambridge, CB3 9DE, UK;2. Faculty of Economics, University of Cambridge and Trinity Hall, Cambridge, CB3 9DE, UK |
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Abstract: | Recent studies have found the Internet backbone to be more competitive than was thought before. This paper explores a novel route to monitor market power using prices and quality data from the online trading site Band-X. First the hypothesis that Europe is a connectivity market on its own, is tested and then, by using a Panel data regression, the paper finds that these markets are not fully competitive since company specific reputation effects play a major role and price variations are only marginally affected by qualitative variables. Worryingly, companies with high prices are often able to supply an inferior quality transit. |
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