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Network Neutrality, Access to Content and Online Advertising

Listed author(s):
  • Anna D'Annunzio

    ()

    (Toulouse School of Economics (GREMAQ) and Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")

  • Antonio Russo

    (RSCAS, European University Institute)

We investigate possible effects of network neutrality regulation on the distribution of content in the Internet. We model a two-sided market, where consumers and advertisers interact through Content Providers (CPs), and CPs and consumers through Internet Service Providers (ISPs). Multiple impressions of an ad on a consumer are partially wasteful. Thus, equilibrium ad rates decrease with the number of CPs consumers can browse. Under network neutrality, CPs can connect to any ISP for free, while in the unregulated regime they have to pay a (non-discriminatory) access fee set by the ISP.We show that universal distribution of content is always an equilibrium with net neutrality regulation. Instead, in the unregulated regime, ISPs can use access fees to rule out universal distribution when it is not protable, i.e. when repeated impressions of an ad rapidly lose value and consumers care for content availability to a small extent. We also nd that the unregulated regime is never superior to net neutrality from a welfare point of view. Consumer and advertiser surplus are weakly higher under net neutrality. ISPs are unambiguously better o in the unregulated regime, while CPs are unambiguously worse off.

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File URL: http://www.dis.uniroma1.it/~bibdis/RePEc/aeg/report/2013-09.pdf
File Function: Revised version, 2013
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Paper provided by Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza" in its series DIAG Technical Reports with number 2013-09.

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Length: 45 pages
Date of creation: Sep 2013
Handle: RePEc:aeg:report:2013-09
Contact details of provider: Phone: +390677274140
Fax: +39 0677274129
Web page: http://www.dis.uniroma1.it
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