Network Externalities and Interconnection: The Case of Information Intrastructures

28 Pages Posted: 30 Nov 2002

Abstract

Information infrastructures are characterized by the existence of direct and indirect network externalities. However, the presence of externalities poses two types of problem: they create phenomena of overproduction (consumption) and under-production (consumption); and they require the operators reach a critical size of subscribers quickly. Facing this question of critical size, the interconnection makes it possible for the networks to develop by relying on network externalities. However, the justification of interconnection does not concern the externalities solely but is also based on the existence of essential facilities. The first part examines the various types of network externalities, whose implications are presented in the second part. The third part deals with the stakes of the interconnection.

Suggested Citation

Crocq, Isabelle, Network Externalities and Interconnection: The Case of Information Intrastructures. Annals of Public and Cooperative Economics, Vol. 73, No. 1, pp. 41-68, March 2002. Available at SSRN: https://ssrn.com/abstract=313237

Isabelle Crocq (Contact Author)

Universite Paris XIII ( email )

99, av. Jean-Baptiste Clement
Villetaneuse, F 93430
France

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