Incentives for the expansion of network capacity in a 'peering' free access settlement

摘要

The absence of an access fee may hinder the development of capacity in interfaced networks, because the benefits of a larger capacity partly accrue to external consumers. This paper shows, however, that the implied result of under-investment in network capacity may be reversed in a number of circumstances. Different cases are discussed by means of a model, which adopts fairly general assumptions about some key functions. This allows accommodating for a variety of alternative specifications found in the literature.