Trust and Virtual Districts: Evidence from the Milan Internet Exchange

21 Pages Posted: 28 Jun 2007

See all articles by Emanuele Giovannetti

Emanuele Giovannetti

Anglia Ruskin University

Karsten Neuhoff

German Institute for Economic Research (DIW Berlin)

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Abstract

Peering decisions between Internet Service Providers (ISPs) contain substantial non-measurable aspects requiring trust and informal cooperation among peering partners. We study whether virtual districts are observed between Internet peers. Our empirical analysis of the bilateral peering decisions at the Milan Internet Exchange confirms that these decisions are significantly influenced by: travel time either between ISPs' headquarters or towards the exchange - a proxy for distance, bandwidth - a proxy for size, and European connectivity. Proximity still plays a role in reducing the transaction costs of monitoring and punishing deviant behavior within an industry where trust is essential for Internet universal connectivity.

Suggested Citation

Giovannetti, Emanuele and Neuhoff, Karsten and Spagnolo, Giancarlo, Trust and Virtual Districts: Evidence from the Milan Internet Exchange. Metroeconomica, Vol. 58, No. 3, pp. 436-456, July 2007, Available at SSRN: https://ssrn.com/abstract=997172 or http://dx.doi.org/10.1111/j.1467-999X.2007.00277.x

Emanuele Giovannetti (Contact Author)

Anglia Ruskin University ( email )

East Road
Cambridge, Cambridgeshire CB1 1PT
United Kingdom

HOME PAGE: http://https://aru.ac.uk/people/emanuele-giovannetti

Karsten Neuhoff

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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