Antitrust Analysis for the Internet Upstream Market: a BGP Approach

In this paper we study concentration in the European Internet upstream access market. Measurement of market concentration depends on correctly defining the market, but this is not always possible as Antitrust authorities often lack reliable pricing and traffic data. We present an alternative approach based on the inference of the Internet Operators interconnection policies using micro-data sourced from their Border Gateway Protocol tables. Firstly we propose a price-independent algorithm for defining both the vertical and geographical relevant market boundaries, then we calculate market concentration indexes using two novel metrics. These assess, for each undertaking, both its role in terms of essential network facility and of wholesale market dominance. The results, applied to four leading Internet Exchange Points in London, Amsterdam, Frankfurt and Milan, show that some vertical segments of these markets are extremely competitive, while others are highly concentrated, putting them within the special attention category of the Merger Guidelines

Spatial Dispersion of Peering Clusters in the European Internet

We study the role played by geographical distance in the peering decisions between Internet Service Providers. Firstly, we assess whether or not the Internet industry shows clustering in peering; we then concentrate on the dynamics of the agglomeration process by studying the effects of bilateral distance in changing the morphology of existing peering patterns. Our results show a dominance of random spatial patterns in peering agreements. The sign of the effect of distance on the peering decision, driving the agglomeration/dispersion process, depends, however, on the initial level of clustering. We show that clustered patterns will disperse in the long run

‘Unfair’ Discrimination in Two-sided Peering? Evidence from LINX

‘Unfair’ Discrimination in Two-sided Peering? Evidence from LINX Abstract: Does asymmetry between Internet Providers affect the “fairness” of their interconnection contracts? While recent game theoretic literature provides contrasting answers to this question, there is a lack of empirical research. We introduce a novel dataset on micro-interconnection policies and provide an econometric analysis of the determinants of peering decisions amongst the Internet Service Providers interconnecting at the London Internet Exchange Point (LINX). Our key result shows that two different metrics, introduced to capture asymmetry, exert opposite effects. Asymmetry in “market size” enhances the quality of the link, while asymmetry in “network centrality” induces quality degradation, hence “unfairer” interconnection conditions

Asymmetry and Discrimination in Internet Peering Evidence from the LINX

Is the quality of interconnection between Internet operators affected by their asymmetry? While recent game theoretic literature provides contrasting answers to this question, there is a lack of empirical research. We introduce a novel dataset based on Internet routing policies, and study the interconnection decisions amongst the Internet Service Providers (ISPs) members of the London Internet Exchange Point (LINX). Our results show that interconnection quality degradation can be significantly explained by asymmetry between providers. We also show that Competition Authorities should focus more on the role played by the “centrality of an operatorâ€, rather than on its market share.Internet Peering, Two-sided Markets, Network Industries, Antitrust, Net Neutrality

Antitrust Analysis for the Internet Upstream Market: A BGP Approach

In this paper we study concentration in the European Internet upstream access market. The possibility of measuring market concentration depends on a correct definition of the market itself; however, this is not always possible, since, as it is the case of the Internet industry, very often Antitrust authorities lack reliable pricing and traffic data. This difficulty motivates our paper. We present an alternative approach based on the inference of the Internet Operators interconnection policies using micro-data sourced from their Border Gateway Protocol tables. We assess market concentration following a two step process: firstly we propose a price-independent algorithm for defining both the vertical and geographical relevant market boundaries, then we calculate market concentration indexes using two novel metrics. These assess, for each undertaking, both itsrole in terms of essential network facility and of wholesale market dominance. The results, applied to four leading Internet Exchange Points in London, Amsterdam, Frankfurt and Milan, show that some vertical segments of these markets are highly concentrated, while others are extremely competitive. According to the Merger Guidelines some of the estimated market concentration values would immediately fall within the special attention category.Technology and Industry, Other Topics

The causal effect of credit guarantees for SMEs: evidence from Italy

We evaluate the effectiveness of a partial credit guarantee program implemented in a large Italian region using unique microdata from a broad set of firms. Our results show that the policy was effective to the extent that it resulted in an improved financial condition for the beneficiary firms. While the total amount of bank debt was unaffected, firms showed a significant increase in the long-term component. Furthermore, targeted firms benefited from a substantial decrease in interest rates. On the other hand, there is some evidence that the probability of default increases as a consequence of the treatment, although the effect is only marginally significant. There are, instead, no effects on the real outcomes

Gotham city. Predicting ‘corrupted’municipalities with machine learning

The economic costs of white-collar crimes, such as corruption, bribery, embezzlement, abuse of authority, and fraud, are substantial. How to eradicate them is a mounting task in many countries. Using police archives, we apply machine learning algorithms to predict corruption crimes in Italian municipalities. Drawing on input data from 2011, our classification trees correctly forecast over 70 % (about 80 %) of the municipalities that will experience corruption episodes (an increase in corruption crimes) over the period 2012–2014. We show that algorithmic predictions could strengthen the ability of the 2012 Italy's anti-corruption law to fight white-collar delinquencies and prevent the occurrence of such crimes while preserving transparency and accountability of the policymaker

Continental differences in the clusters of integration: Empirical evidence from the digital commodities global supply chain networks

Digital commodities are delivered worldwide through a Global Supply Chain Network of providers. These are usually interconnected via Local Supply Chain Networks, based around Internet Exchange Points, the physical places where most digital exchanges take place. Providers compete both for business and final customers, while cooperating the exchanges of information flows composing the digital commodities, to provide a complete, end to end, service to final users. A myriad of interconnection decisions form the connectivity's architecture of this Global Supply Chain Network, designing the rules of the business game played by the operators. This paper, using a dataset of interconnection protocols over 195 Internet Exchange Points across the World, focuses on the relationship between a provider's connectivity and clustering: the mutual connectivity among the operators this provider is connected to. The strategic relevance of this relationship between connectivity and clustering is clear: the better connected a provider is, the easier it is to deliver the digital commodities with high quality and low costs and, when the neighbours of a provider are less interconnected among themselves, it is easier, for the provider, to exert its bargaining power over them. We estimate an econometric model finding that the continental location of an Internet Exchange Point has a significant effect on the sign of the elasticity between clustering and connectivity. This indicates that Local Supply Chain Networks display significant differences in their clusters of integration, hierarchical organization and complexity, depending on whether they are based in Europe, North America or Rest of the World

From Exogenous to Endogenous Networks: Internet Applications

Economic agents' behavior is affected by their position in a network, either exogenous or endogenous, in which they interact with a subset of neighbours only. The network's links, which may be generated by vertical and/or horizontal relations, or by more complex morphologies, may explain the transition between dynamic equilibria and the instability of economic aggregates. Moreover, networks shape strategic interaction among agents by determining their strategies; the problem of access and interconnection, particularly relevant in the Internet, is perhaps the best example. A two-way feedback between strategies and network structures arises instead when links are endogenous: those features are clearly shown in the mechanism underlying the formation of peering links and R & D networks

Clustering, Connectivity and Power laws: Useful Tools for Assessing Market Structure of the European Internet?

We study the relation between connectivity and clustering ,of Internet Service Providers, ISPs, to understand the hierarchy within European Internet Exchange Points, IXPs. We assess the possibility of power law relations between clustering and connectivity, typical markers for a hierarchical Internet market structure. We find a predominantly inverse relation between local clustering and peering strength confirming that, within the members of a given IXP, the most connected ISPs have direct neighbours that are poorly connected among themselves. The implications for market analysis of these studies of the Internet Connectivity at are discussed