Dark Clouds Over the Internet?

13 Pages Posted: 26 Jan 2005

See all articles by Jens Prufer

Jens Prufer

Tilburg University; Tilburg University - Department of Economics; Tilburg University - Law and Economics Center (TILEC)

Eric Jahn

Goethe University, Frankfurt

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Date Written: January 26, 2005

Abstract

Currently, the Internet is characterised by excess capacity which benefits consumers and producers alike. High quality and declining prices of interconnection are the basis for many e-commerce, software and equipment businesses. However, tough competition in the Internet backbone market driving these developments could ruin network operators and, hence, threaten other markets, too. We pursue the idea of the Internet backbone market's decline with standard economic theory. We offer several scenarios and discuss potential market based and policy based remedies. We find that due to a phenomenon we call capacity paradox the industry's future development is overshadowed by "dark clouds".

Keywords: Internet Backbone Market

JEL Classification: D4, L1, L5, L96

Suggested Citation

Prufer, Jens and Jahn, Eric, Dark Clouds Over the Internet? (January 26, 2005). Available at SSRN: https://ssrn.com/abstract=654442 or http://dx.doi.org/10.2139/ssrn.654442

Jens Prufer (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Eric Jahn

Goethe University, Frankfurt ( email )

60054 Frankfurt
Germany

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