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Network Neutrality under ISP duopoly: on the ability to assign capacity

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Author Info

  • Duarte Brito

    ()
    (Universidade Nova de Lisboa and CEFAGE-UE)

  • Pedro Pereira

    ()
    (Autoridade da Concorrência and CEFAGE-UE)

  • João Vareda

    ()
    (CEFAGE-UE)

Abstract

We analyze the impact of network neutrality regulation on: (i) competition between CPs, and on (ii) ISPs. incentives to invest. We consider both competition between ISPs and between CPs and show that, if ISPs can o¤er network services of different quality to CPs, they prefer to sell the highest quality network services to the CP that collects the highest advertising revenues. We further show that the impact of network neutrality regulation on the investment in the quality of network services is potentially ambiguous and depends on: (i) whether ISPs are symmetric, and (ii) the ISPs.ability to assign network.s capacity to CPs. If ISPs are symmetric and have full discretion on how to allocate the level of quality of network services among CPs, investment and welfare are higher under the discriminatory regime.

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Bibliographic Info

Paper provided by University of Evora, CEFAGE-UE (Portugal) in its series CEFAGE-UE Working Papers with number 2013_19.

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Length: 29 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:cfe:wpcefa:2013_19

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Related research

Keywords: Network Neutrality; Competition; Investment.;

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  1. Schuett Florian, 2010. "Network Neutrality: A Survey of the Economic Literature," Review of Network Economics, De Gruyter, vol. 9(2), pages 1-15, June.
  2. Carlo Reggiani & Tommaso Valletti, 2012. "Net neutrality and innovation at the core and at the edge," The School of Economics Discussion Paper Series 1202, Economics, The University of Manchester.
  3. Hermalin, Benjamin E. & Katz, Michael L., 2007. "The economics of product-line restrictions with an application to the network neutrality debate," Information Economics and Policy, Elsevier, vol. 19(2), pages 215-248, June.
  4. Nicholas Economides & Joacim Tåg, 2007. "Net Neutrality on the Internet: A Two-sided Market Analysis," Working Papers 07-45, NET Institute, revised Nov 2007.
  5. Nicholas Economides & Benjamin Hermalin, 2010. "The Economics of Network Neutrality," Working Papers 10-25, NET Institute.
  6. Marc Bourreau & Frago Kourandi & Tommaso Valletti, 2014. "Net Neutrality with Competing Internet Platforms," CEIS Research Paper 307, Tor Vergata University, CEIS, revised 14 Feb 2014.
  7. Musacchio John & Schwartz Galina & Walrand Jean, 2009. "A Two-Sided Market Analysis of Provider Investment Incentives with an Application to the Net-Neutrality Issue," Review of Network Economics, De Gruyter, vol. 8(1), pages 1-18, March.
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