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Internet Regulation, Two-Sided Pricing, and Sponsored Data

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  • Jullien, Bruno
  • Sand-Zantman, Wilfried

Abstract

We consider zero-rating by Internet service providers. We analyze the implications of offering sponsored data plans that allow content providers to pay for traffic on behalf of their consumers. These plans boost consumption of high-value content and decrease the networks'incentives to exclude low-value content. The welfare effect of allowing this price discrimination depends on the proportion of content targeted and the value of contents. Our analysis is extended to various cases (one-sided pricing, competing network, heterogenous cost, paid contents).

Suggested Citation

  • Jullien, Bruno & Sand-Zantman, Wilfried, 2012. "Internet Regulation, Two-Sided Pricing, and Sponsored Data," TSE Working Papers 12-327, Toulouse School of Economics (TSE), revised Dec 2017.
    • Handle: RePEc:tse:wpaper:26061
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    Cited by:

    1. Marc Bourreau & Romain Lestage, 2019. "Net neutrality and asymmetric platform competition," Journal of Regulatory Economics, Springer, vol. 55(2), pages 140-171, April.
    2. Saruta, Fuyuki, 2021. "Effects of Vertical Integration on Internet Service Providers' Zero-rating Choice," MPRA Paper 110288, University Library of Munich, Germany.
    3. Gautier, Axel & Somogyi, Robert, 2020. "Prioritization vs zero-rating: Discrimination on the internet," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    4. Inceoglu, Firat & Liu, Xingyi, 2019. "Multiproduct price discrimination with quantity limits: An application to zero-rating," Economics Letters, Elsevier, vol. 180(C), pages 41-45.
    5. Chillemi, Ottorino & Galavotti, Stefano & Gui, Benedetto, 2020. "The impact of data caps on mobile broadband Internet access: A welfare analysis," Information Economics and Policy, Elsevier, vol. 50(C).
    6. Lorenzon, Emmanuel, 2022. "Zero-rating, content quality, and network capacity," Information Economics and Policy, Elsevier, vol. 58(C).
    7. Klaser, Klaudijo & Pinar García, Lucía Desamparados, 2023. "Zero-rating and prioritization in Europe during the Covid-19 pandemic: a Rawlsian perspective on net neutrality," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    8. Saruta, Fuyuki, 2022. "Effects of vertical integration on internet service providers’ zero-rating choice," Information Economics and Policy, Elsevier, vol. 61(C).
    9. Peitz, Martin & Schuett, Florian, 2016. "Net neutrality and inflation of traffic," International Journal of Industrial Organization, Elsevier, vol. 46(C), pages 16-62.
    10. Poudou, Jean-Christophe & Sand-Zantman, Wilfried, 2023. "The environmental impact of Internet regulation," Information Economics and Policy, Elsevier, vol. 65(C).
    11. Krämer, Jan & Peitz, Martin, 2018. "A fresh look at zero-rating," Telecommunications Policy, Elsevier, vol. 42(7), pages 501-513.
    12. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
    13. Jaunaux, Laure & Lebourges, Marc, 2018. "Zero rating and end-users' freedom of choice: An economic analysis," 29th European Regional ITS Conference, Trento 2018 184947, International Telecommunications Society (ITS).
    14. Broos, Sébastien & Gautier, Axel, 2017. "The exclusion of competing one-way essential complements: Implications for net neutrality," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 358-392.
    15. Jeitschko, Thomas D. & Kim, Soo Jin & Yankelevich, Aleksandr, 2021. "Zero-Rating and Vertical Content Foreclosure," Information Economics and Policy, Elsevier, vol. 55(C).
    16. Schnurr, Daniel & Wiewiorra, Lukas, 2018. "Bit-by-Bit Towards Unlimited: An Analysis of Zero Rating and Sponsored Data Practices of Internet Service Providers," 29th European Regional ITS Conference, Trento 2018 184965, International Telecommunications Society (ITS).
    17. Bruno Jullien & Matthieu Bouvard, 2022. "Fair cost sharing: big tech vs telcos," Working Papers hal-03832908, HAL.
    18. Reggiani, Carlo & Valletti, Tommaso, 2016. "Net neutrality and innovation at the core and at the edge," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 16-27.
    19. Saruta, Fuyuki, 2020. "Effects of Content Providers' Heterogeneity on Internet Service Providers' Zero-rating Choice," MPRA Paper 107505, University Library of Munich, Germany, revised May 2021.
    20. Subodha Kumar & Xiaowei Mei & Liangfei Qiu & Lai Wei, 2020. "Watching Ads for Free Mobile Data: A Game-Theoretic Analysis of Sponsored Data with Reward Task," Working Papers 20-08, NET Institute.
    21. Emmanuel LORENZON, 2020. "Zero Rating, Content Quality and Network Capacity," Bordeaux Economics Working Papers 2020-21, Bordeaux School of Economics (BSE).
    22. Hoernig, Steffen & Monteiro, Francisco, 2020. "Zero-rating and network effects," Economics Letters, Elsevier, vol. 186(C).
    23. Steffen Hoernig; Francisco Monteiro, 2018. "Zero-rating, network effects, and capacity investments," Nova SBE Working Paper Series wp627, Universidade Nova de Lisboa, Nova School of Business and Economics.
    24. Jullien, Bruno & Bouvard, Matthieu, 2022. "Fair cost sharing: big tech vs telcos," TSE Working Papers 22-1376, Toulouse School of Economics (TSE).

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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