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Weak versus strong net neutrality

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Abstract

This paper provides a framework to classify and evaluate the impact of net neutrality regulations on the allocation of consumer attention and the distribution of surplus between consumers, ISPs and content providers. While the model provided largely nests other contributions in the literature, here the focus is on including direct payments from consumers to content providers. With this additional price it is demonstrated that the type of net neutrality regulation (i.e., weak versus strong net neutrality) matters for such regulations to have real effects. In addition, we provide support for the notion that strong net neutrality may stimulate content provider investment while the model concludes that there is unlikely to be any negative impact from such regulation on ISP investment. Counter to many claims, it is argued here that ISP competition may not be a substitute for net neutrality regulation in bringing about these effects. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Joshua Gans, 2015. "Weak versus strong net neutrality," Journal of Regulatory Economics, Springer, vol. 47(2), pages 183-200, April.
  • Handle: RePEc:kap:regeco:v:47:y:2015:i:2:p:183-200
    DOI: 10.1007/s11149-014-9266-7
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    References listed on IDEAS

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    1. Jay Pil Choi & Byung‐Cheol Kim, 2010. "Net neutrality and investment incentives," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 446-471, September.
    2. Reggiani, Carlo & Valletti, Tommaso, 2016. "Net neutrality and innovation at the core and at the edge," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 16-27.
    3. Marc Bourreau & Frago Kourandi & Tommaso Valletti, 2015. "Net Neutrality with Competing Internet Platforms," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 30-73, March.
    4. Economides, Nicholas & Tåg, Joacim, 2012. "Network neutrality on the Internet: A two-sided market analysis," Information Economics and Policy, Elsevier, vol. 24(2), pages 91-104.
    5. Nicholas Economides & Benjamin E. Hermalin, 2012. "The economics of network neutrality," RAND Journal of Economics, RAND Corporation, vol. 43(4), pages 602-629, December.
    6. 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.
    7. repec:bla:jindec:v:66:y:2018:i:1:p:172-204 is not listed on IDEAS
    8. Jay Pil Choi & Doh-Shin Jeon & Byung-Cheol Kim, 2013. "Asymmetric Neutrality Regulation and Innovation at the Edges: Fixed vs. Mobile Networks," Working Papers 13-24, NET Institute.
    9. Jay Pil Choi & Doh†Shin Jeon & Byung†Cheol Kim, 2018. "Net Neutrality, Network Capacity, and Innovation at the Edges," Journal of Industrial Economics, Wiley Blackwell, vol. 66(1), pages 172-204, March.
    10. 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.
    11. Choi, Jay Pil, 1995. "Optimal tariffs and the choice of technology Discriminatory tariffs vs. the 'Most Favored Nation' clause," Journal of International Economics, Elsevier, vol. 38(1-2), pages 143-160, February.
    12. Gans Joshua S & King Stephen P, 2003. "The Neutrality of Interchange Fees in Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
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    Citations

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    Cited by:

    1. Marc Bourreau & Romain Lestage, 2019. "Net neutrality and asymmetric platform competition," Journal of Regulatory Economics, Springer, vol. 55(2), pages 140-171, April.
    2. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
    3. repec:kap:revind:v:50:y:2017:i:4:d:10.1007_s11151-017-9573-0 is not listed on IDEAS
    4. repec:eee:telpol:v:43:y:2019:i:1:p:1-10 is not listed on IDEAS
    5. Reggiani, Carlo & Valletti, Tommaso, 2016. "Net neutrality and innovation at the core and at the edge," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 16-27.
    6. Joshua S. Gans & Michael L. Katz, 2016. "Net Neutrality, Pricing Instruments and Incentives," NBER Working Papers 22040, National Bureau of Economic Research, Inc.
    7. Joshua S. Gans & Michael L. Katz, 2016. "Weak versus strong net neutrality: correction and clarification," Journal of Regulatory Economics, Springer, vol. 50(1), pages 99-110, August.
    8. Vogelsang, Ingo, 2019. "Net neutrality regulation: Much ado about nothing?," ZEW Discussion Papers 19-023, ZEW - Leibniz Centre for European Economic Research.
    9. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.
    10. repec:eee:indorg:v:52:y:2017:i:c:p:358-392 is not listed on IDEAS
    11. repec:bpj:rneart:v:17:y:2018:i:3:p:225-243:n:3 is not listed on IDEAS
    12. Broos, Sébastien & Gautier, Axel, 2017. "The exclusion of competing one-way essential complements: Implications for net neutrality," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 358-392.
    13. Jeitschko, Thomas D. & Kim, Soo Jin & Yankelevich, Aleksandr, 2019. "Zero-rating and vertical content foreclosure," DICE Discussion Papers 317, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    14. repec:eee:juipol:v:54:y:2018:i:c:p:37-45 is not listed on IDEAS
    15. repec:bpj:rneart:v:17:y:2018:i:3:p:151-173:n:1 is not listed on IDEAS
    16. repec:bpj:rneart:v:17:y:2018:i:3:p:115-150:n:5 is not listed on IDEAS

    More about this item

    Keywords

    Regulation; Net neutrality; Internet service providers; Content providers; Infrastructure investment; L1; D4; L12; L13; C63; D42; D43;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K2 - Law and Economics - - Regulation and Business Law
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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