Horizontal Mergers in Internet

Our work concerns the Internet network. We propose to modify the traditional analysis of the theoretical economic literature which emphasizes on the vertical integration among backbones and ISPs, and his difficulties because IBPs have a strongmarket power. We propose to build a sequential game in two stages. We consider on the downstream market a competition between ISP horizontally differentiated, while on the upstream market, the IBP compete à la Cournot. In absence of regulation on the upstream, we find that, a merger among ISPs can under certain conditions decrease the access charge, by valorizing of the positive externalities in installed bases. Such a result can justify a softer anti-trust authorities. judgment.