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Net neutrality and innovation at the core and at the edge

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  • Carlo Reggiani
  • Tommaso Valletti

Abstract

How would abandoning Internet net neutrality affect content providers that have different sizes? We model an Internet broadband provider that can offer a different quality of service (priority) to heterogeneous content providers. Internet users can potentially access all content, although they browse and click ads with different probabilities. Net neutrality regulation effectively protects innovation done at the edge by small content providers. Prioritization, instead, increases both infrastructure core investment and welfare only if it sufficiently stimulates innovation from the large content provider.
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Suggested Citation

  • Carlo Reggiani & Tommaso Valletti, 2012. "Net neutrality and innovation at the core and at the edge," Economics Discussion Paper Series 1202, Economics, The University of Manchester.
    • Handle: RePEc:man:sespap:1202
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    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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