Internet Interconnection and Network Neutrality
We analyze competition between interconnected networks when content is heterogeneous in its sensitivity to delivery quality. In a two-sided market framework, we characterize the equilibrium in a neutral network constrained to offer the same quality and assess the impact of such a constraint vis-à-vis a non-neutral network where Internet service providers (ISPs) are allowed to engage in second degree price discrimination with a menu of quality-price pairs. We find that the merit of net neutrality regulation depends crucially on content providers' business models. More generally, our analysis can be considered as a contribution to the literature on second-degree price discrimination in two-sided platform markets.
|Date of creation:||Nov 2012|
|Date of revision:|
|Publication status:||Published in American Economic Journal: Microeconomics, 2015.|
|Contact details of provider:|| Phone: (+33) 5 61 12 86 23|
Web page: http://www.tse-fr.eu/
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- Robin S. Lee & Tim Wu, 2009. "Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 61-76, Summer.
- Marc Bourreau & Frago Kourandi & Tommaso Valletti, 2014.
"Net Neutrality with Competing Internet Platforms,"
CEIS Research Paper
307, Tor Vergata University, CEIS, revised 14 Feb 2014.
- Hurkens, Sjaak & Jeon, Doh-Shin, 2012. "Promoting network competition by regulating termination charges," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 541-552.
- Doh Shin Jeon & Jean Jacques Laffont & Jean Tirole, 2001.
"On the receiver pays principle,"
Economics Working Papers
561, Department of Economics and Business, Universitat Pompeu Fabra.
- 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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