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

  • Duarte Brito

    ()

    (Universidade Nova de Lisboa and CEFAGE-UE)

  • Pedro Pereira

    ()

    (Autoridade da Concorrência and CEFAGE-UE)

  • João Vareda

    ()

    (CEFAGE-UE)

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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File URL: http://www.cefage.uevora.pt/en/content/download/4261/51860/version/1/file/2013_19.pdf
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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
Contact details of provider: Postal: Colégio Espírito SANTO
Phone: (351) 266 740 869
Web page: http://www.cefage.uevora.pt
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  1. Chris Edmond, 2007. "Information Revolutions and the Overthrow of Autocratic Regimes," Working Papers 07-26, New York University, Leonard N. Stern School of Business, Department of Economics.
  2. 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.
  3. 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.
  4. Nicholas Economides & Benjamin E. Hermalin, 2012. "The economics of network neutrality," RAND Journal of Economics, RAND Corporation, vol. 43(4), pages 602-629, December.
  5. Bourreau, Marc & Kourandi, Frago & Valletti, Tommaso, 2014. "Net Neutrality with Competing Internet Platforms," CEPR Discussion Papers 9827, C.E.P.R. Discussion Papers.
  6. Schuett Florian, 2010. "Network Neutrality: A Survey of the Economic Literature," Review of Network Economics, De Gruyter, vol. 9(2), pages 1-15, June.
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