Game-Theoretic Models of ISP-ISP and ISP-Customer Interactions

Abstract

The talk will consist of two parts. In the first part of the talk, we will examine how transit and customer prices and quality of service are set in a network consisting of multiple ISPs. Some ISPs may face an identical set of circumstances in terms of potential customer pool and running costs. We will examine the existence of equilibrium strategies in this situation and show how positive profit can be achieved using threat strategies with multiple qualities of service. It will be shown that if the number of ISPs competing for the same customers is large then it can lead to price wars. ISPs that are not co-located may not directly compete for users, but may be nevertheless involved in a non-cooperative game of setting access and transit prices for each other. They are linked economically through a sequence of providers forming a hierarchy, and we study their interaction by considering a multi-stage game. We will also consider the economics of private exchange points and show that they could become far more wide spread then they currently are. This is joint work with Srinivas Shakkottai (UIUC) (see [1]).