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Internet Regulation, Two-Sided Pricing, and Sponsored Data

  • Jullien, Bruno
  • Sand-Zantman, Wilfried

We consider a network that intermediates traffic between free content providers and consumers. Two-sided pricing of consumers and content providers allows profit extraction by the network and transmission of information on the social value of content. Profit maximizing tariffs give the content providers the option to sponsor the traffic of consumers. We show that a cost-oriented price-cap on the charge to content providers improves social welfare, while banning discrimination or imposing zero price for content providers is not optimal if content is valuable enough.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 12-327.

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Date of creation: Jun 2012
Date of revision: Apr 2015
Handle: RePEc:tse:wpaper:26061
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Web page: http://www.tse-fr.eu/

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  1. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
  2. Choi, Jay & Jeon, Doh-Shin & Kim, Byung-Cheol, 2014. "Asymmetric Neutrality Regulation and Innovation at the Edges: Fixed vs. Mobile Networks," TSE Working Papers 14-521, Toulouse School of Economics (TSE).
  3. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  4. Jean-Charles Rochet & Jean Triole, 2002. "Platform competition in two sided markets," LSE Research Online Documents on Economics 24929, London School of Economics and Political Science, LSE Library.
  5. 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.
  6. Peitz, M. & Schütt, F., 2015. "Net neutrality and inflation of traffic," Discussion Paper 2015-006, Tilburg University, Tilburg Law and Economic Center.
  7. Doh-Shin Jeon & Jean-Jacques Laffont & Jean Tirole, 2004. "On the Receiver-Pays Principle," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 85-110, Spring.
  8. Jullien, Bruno & Mariotti, Thomas, 2002. "Auction and the Informed Seller Problem," IDEI Working Papers 145, Institut d'Économie Industrielle (IDEI), Toulouse, revised Oct 2004.
  9. Hermalin, Benjamin E & Katz, Michael L, 2006. "The Economics of Product-Line Restrictions With an Application to the Network Neutrality Debate," Competition Policy Center, Working Paper Series qt81r3b7xs, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  10. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  11. Hermalin, Benjamin E. & Katz, Michael L, 2009. "Information and the Hold-Up Problem," Department of Economics, Working Paper Series qt782315gb, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  12. Krämer, Jan & Wiewiorra, Lukas, 2009. "Network neutrality and congestion sensitive content providers: Implications for content variety, broadband investment and regulation," MPRA Paper 42519, University Library of Munich, Germany, revised 15 Jan 2012.
  13. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
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