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Network externalities and interconnection: the case of information intrastructures
Author(s) -
Crocq Isabelle
Publication year - 2002
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/1467-8292.00185
Subject(s) - externality , interconnection , network effect , consumption (sociology) , production (economics) , microeconomics , business , economics , industrial organization , computer science , computer network , sociology , social science
Information infrastructures are characterized by the existence of direct and indirect network externalities. However, the presence of externalities poses two types of problem: they create phenomena of overproduction (consumption) and under‐production (consumption); and they require the operators reach a critical size of subscribers quickly. Facing this question of critical size, the interconnection makes it possible for the networks to develop by relying on network externalities. However, the justification of interconnection does not concern the externalities solely but is also based on the existence of essential facilities. The first part examines the various types of network externalities, whose implications are presented in the second part. The third part deals with the stakes of the interconnection.