Estimating Market Power in the Internet Backbone Using Band-X Data
Cambridge Working Paper in Economics No. 0332
19 Pages Posted: 10 Oct 2003
Date Written: June 2003
Recent industry studies found the Internet backbone industry competitive. In our paper we explore a novel route to monitor for market power using prices and quality data from Band-X. First we test the hypothesis that Europe is a connectivity market on its own, unchallenged by the US and then, by using a Panel data Regression, we find that these markets are not very competitive since brand effects play a major role because price variations are only marginally affected by qualitative dimensions. More worryingly we find that companies with high prices are often able to supply an inferior quality I.P. transit.
Keywords: Internet, Market Power, Backbone, Competition Policy, Network Industries
JEL Classification: JEL: C33, L13, L86, L96
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