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Network Neutrality and Network Management Regulation: Quality of Service, Price Discrimination, and Exclusive Contracts

Author

Listed:
  • Economides, Nicholas

    (Stern School of Business)

  • Tåg, Joacim

    (Research Institute of Industrial Economics (IFN))

Abstract

We compare four approaches to network neutrality and network management regulation in a two-sided market model: (i) no variations in Quality of Service and no price discrimination; (ii) variations in Quality of Service but no price discrimination; (iii) variations in Quality of Service and price discrimination but no exclusive contracts; and (iv) no regulation: the network operator can sell exclusive rights to content providers. We compare the equilibrium outcomes explicitly accounting for dynamic incentives to invest in improving the Quality of Service offered to each content provider. We provide a ranking Quality of Service and network operator profits across regimes.

Suggested Citation

  • Economides, Nicholas & Tåg, Joacim, 2011. "Network Neutrality and Network Management Regulation: Quality of Service, Price Discrimination, and Exclusive Contracts," Working Paper Series 890, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0890
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    References listed on IDEAS

    as
    1. Chen, M. Keith & Nalebuff, Barry, 2006. "One-Way Essential Complements," Working Papers 22, Yale University, Department of Economics.
    2. 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.
    3. Christiaan Hogendorn, 2007. "Broadband Internet: net neutrality versus open access," International Economics and Economic Policy, Springer, vol. 4(2), pages 185-208, August.
    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. Krämer, Jan & Wiewiorra, Lukas, 2009. "Innovation through Discrimination!? A Formal Analysis of the Net Neutrality Debate," MPRA Paper 16655, University Library of Munich, Germany.
    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.
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    Cited by:

    1. Baglioni, Laura & Calabrese, Armando & Ghiron, Nathan Levialdi, 2013. "Net neutrality at internet backbone provider level," 24th European Regional ITS Conference, Florence 2013 88506, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    Network neutrality; Internet price discrimination; Exclusivity; Quality of Service; Network management; Congestion; AT&T; Verizon; Google;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • 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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