Dynamic Bargaining and Size Effects in the Broadband Industry

65 Pages Posted: 5 Mar 2019 Last revised: 22 Dec 2019

Date Written: January 31, 2019

Abstract

I estimate a model of dynamic bargaining between internet service providers (ISPs) and Netflix over interconnection fees and use it to evaluate counterfactual ISP mergers. I show that the size of the downstream consumer market an ISP serves is much more important than its disagreement point for determining bargaining outcomes with Netflix. I evaluate several mergers between ISPs serving non-overlapping markets and find that smaller ISP mergers would lengthen negotiations and reduce Netflix's share of the bargaining surplus, while larger mergers would have no significant effect.

Keywords: Mergers, Broadband Internet, Bargaining

JEL Classification: L41, L96, C73

Suggested Citation

Goetz, Daniel, Dynamic Bargaining and Size Effects in the Broadband Industry (January 31, 2019). Available at SSRN: https://ssrn.com/abstract=3332461 or http://dx.doi.org/10.2139/ssrn.3332461

Daniel Goetz (Contact Author)

Rotman School of Management ( email )

United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
85
Abstract Views
613
Rank
523,925
PlumX Metrics