| Part I: On Internet interconnection agreements. Public peering points, where Internet backbone networks inter-connect primarily, are congested. Consequently, bilateral private agreements for increased interconnection capacity between networks have become common.; In essay 1, we model two networks serving different regions and evaluate benefits from private interconnection over public-peering connection. We find the benefits are unevenly distributed and that smaller networks gain more. Further, this disparity grows as public points get more congested. This makes larger networks less willing to peer with others.; In essay 2, we model two networks competing in some common region and hosting different proportions of content. We show that for a low overlap, they favor private interconnection with high interconnection capacity. For a high overlap, on the other hand, they reject private interconnection, preferring low interconnection capacity. In between, the network with more content prefers low capacity whereas the other network favors high capacity.; Part II: On yield management of information goods. We evaluate strategy of a seller who offers an information good through spot buying, forward buying at reduced price, or a combination of the two.; In essay 3, we model consumer reaction. We establish that consumers preferring forward buying have relatively high expectation and low uncertainty in their reservation prices for the good at the time of advance purchase, while those preferring spot buying have relatively low expectation and high uncertainty. Further, consumers' expected surplus from a mixed offering is at least as high as from a pure offering of either spot buying only or forward buying only.; In essay 4, we analyze the firm's problem when it is either a price taker or a price setter. When the firm is a price taker, the choice is whether to offer the good for only forward buying, only spot buying, or a combination of the two. We show that when the spot price and the forward discount are moderate in value, the seller chooses the combination strategy. When the firm is a price setter, the choice is how to price the two offerings. We show the firm can increase its revenue with the combination strategy. |
