Abstract
In the recent decade, global backbone providers have emerged to link dispersed networks. Local networks obtain global connectivity through transit contracts with switching hubs. Using the Shapley value, this paper shows that the bargaining position of the local network depends upon the quality-adjusted volume of net traffic, and that the rent to the hub depends on the volume of traffic between local networks. When there are two competing switching hubs, the larger hub can appropriate most of the rent. Anticipating this, the hubs tend to expand their capacity to preempt the market, as in the prisoners' dilemma.
| Original language | English |
|---|---|
| Journal | Journal of Institutional and Theoretical Economics |
| Volume | 161 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2005 Dec 1 |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
The role of switching hubs in global internet traffic. / Yoon, Chang Ho; Song, Young Woong; Jun, Byoung Heon.
In: Journal of Institutional and Theoretical Economics, Vol. 161, No. 4, 01.12.2005.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - The role of switching hubs in global internet traffic
AU - Yoon, Chang Ho
AU - Song, Young Woong
AU - Jun, Byoung Heon
PY - 2005/12/1
Y1 - 2005/12/1
N2 - In the recent decade, global backbone providers have emerged to link dispersed networks. Local networks obtain global connectivity through transit contracts with switching hubs. Using the Shapley value, this paper shows that the bargaining position of the local network depends upon the quality-adjusted volume of net traffic, and that the rent to the hub depends on the volume of traffic between local networks. When there are two competing switching hubs, the larger hub can appropriate most of the rent. Anticipating this, the hubs tend to expand their capacity to preempt the market, as in the prisoners' dilemma.
AB - In the recent decade, global backbone providers have emerged to link dispersed networks. Local networks obtain global connectivity through transit contracts with switching hubs. Using the Shapley value, this paper shows that the bargaining position of the local network depends upon the quality-adjusted volume of net traffic, and that the rent to the hub depends on the volume of traffic between local networks. When there are two competing switching hubs, the larger hub can appropriate most of the rent. Anticipating this, the hubs tend to expand their capacity to preempt the market, as in the prisoners' dilemma.
UR - http://www.scopus.com/inward/record.url?scp=30344444309&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=30344444309&partnerID=8YFLogxK
U2 - 10.1628/093245605775076004
DO - 10.1628/093245605775076004
M3 - Article
VL - 161
JO - Journal of Institutional and Theoretical Economics
JF - Journal of Institutional and Theoretical Economics
SN - 0932-4569
IS - 4
ER -