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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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  11. 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.
  12. 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.
  13. 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.
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