Internet Interconnection and Network Neutrality
AbstractWe analyze competition between interconnected networks when content is heterogeneous in its sensitivity to delivery quality. In a two-sided market framework, we characterize the equilibrium in a neutral network constrained to offer the same quality and assess the impact of such a constraint vis-à-vis a non-neutral network where Internet service providers (ISPs) are allowed to engage in second degree price discrimination with a menu of quality-price pairs. We find that the merit of net neutrality regulation depends crucially on content providers' business models. More generally, our analysis can be considered as a contribution to the literature on second-degree price discrimination in two-sided platform markets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 12-355.
Date of creation: Nov 2012
Date of revision:
Publication status: Published in American Economic Journal: Microeconomics, 2014.
Other versions of this item:
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L5 - Industrial Organization - - Regulation and Industrial Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-COM-2012-12-06 (Industrial Competition)
- NEP-ICT-2012-12-06 (Information & Communication Technologies)
- NEP-MIC-2012-12-06 (Microeconomics)
- NEP-NET-2012-12-06 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schuett Florian, 2010.
"Network Neutrality: A Survey of the Economic Literature,"
Review of Network Economics,
De Gruyter, vol. 9(2), pages 1-15, June.
- Schuett, F., 2010. "Network Neutrality: A Survey of the Economic Literature," Discussion Paper 2010-014, Tilburg University, Tilburg Law and Economic Center.
- Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring.
- Hurkens, Sjaak & Jeon, Doh-Shin, 2012. "Promoting network competition by regulating termination charges," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 541-552.
- 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.
- Jay Pil Choi & Byung-Cheol Kim, 2008.
"Net Neutrality and Investment Incentives,"
CESifo Working Paper Series
2390, CESifo Group Munich.
- Bruno Jullien & Wilfried Sand-Zantman, 2014.
"Pricing Internet Traffic: Exclusion, Signalling and Screening,"
CESifo Working Paper Series
4709, CESifo Group Munich.
- Jullien, Bruno & Sand-Zantman, Wilfried, 2014. "Pricing Internet Traffic: Exclusion, Signalling and Screening," CEPR Discussion Papers 9896, C.E.P.R. Discussion Papers.
- Jullien, Bruno & Sand-Zantman, Wilfried, 2012. "Pricing Internet Traffic: Exclusion, Signalling and Screening," TSE Working Papers 12-327, Toulouse School of Economics (TSE), revised Feb 2014.
- Jullien, Bruno & Sand-Zantman, Wilfried, 2012. "Pricing Internet Traffic: Exclusion, Signalling and Screening," IDEI Working Papers 735, Institut d'Économie Industrielle (IDEI), Toulouse, revised Feb 2014.
- Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
- Robin S. Lee & Tim Wu, 2009. "Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 61-76, Summer.
- Wouter Dessein, 2000.
"Network Competition in Nonlinear Pricing,"
CIG Working Papers
FS IV 00-22, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
- Antonio Russo & Anna D’Annunzio, 2013.
"Network Neutrality, Access to Content and Online Advertising,"
KOF Working papers
13-344, KOF Swiss Economic Institute, ETH Zurich.
- Anna D'Annunzio & Antonio Russo, 2013. "Network Neutrality, Access to Content and Online Advertising," DIAG Technical Reports 2013-09, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
- Anna D'Annunzio & Antonio Russo, 2013. "Network Neutrality, Access to Content and Online Advertising," RSCAS Working Papers 2013/57, European University Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.