A Game Theoretic Modeling and Analysis for Internet Access Market

In this paper, we study the local dial-up Internet access market using a game theoretic model. Inparticular, we consider the Nash equilibrium of the service providers and examine their behavioron investment and output level. We calibrate this model to fit the industry structure and datafound in rural markets. In the first part of the paper, we examine the Internet industry structureand its characteristics. In the latter part of the paper, we create an abstract Cournot duopolymodel, in which real world cost and revenue projection will be used to find an Internet accessmarket equilibrium and its social welfare. These analyses allow us to explain the motivation forthe ISPs' behavior, such as over-subscription and under-investment. Finally, we will present ananalytical framework for the Internet industry policy maker.