The Internet is a "Network of networks". The effectiveness of the Internet crucially depends on the interconnection among individual networks, which display a hierarchical structure. At the bottom of the hierarchy, individuals and business enterprises use end-systems to connect to local Internet Service Providers (ISPs) through an access network. Local ISPs are connected to regional ISPs, which, in turn, serve as an interface point to the backbone layer. The backbone layer, which is the highest tier in the hierarchy, is built up by multiple interconnected backbone providers. In the Internet industry there are externalities that are derived from its vertical structure. Moreover, the industry is characterized by substantial network externalities.
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