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Network neutrality on the Internet : A two-sided market analysis

Economides, Nicholas and Tåg, Joacim LU orcid (2012) In Information Economics and Policy 24(2). p.91-104
Abstract

We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to... (More)

We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to a duopoly of residential broadband ISPs, we again find parameter values such that network neutrality regulation increases total surplus suggesting that network neutrality regulation could be warranted even when some competition is present.

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author
and
publishing date
type
Contribution to journal
publication status
published
subject
keywords
AT& T, Comcast, Discrimination, Duopoly, Google, Internet, Monopoly, Network neutrality, Regulation, Two-sided markets, Verizon, L1, D4, L12, L13, C63, D42, D43
in
Information Economics and Policy
volume
24
issue
2
pages
14 pages
publisher
Elsevier
external identifiers
  • scopus:84861337086
ISSN
0167-6245
DOI
10.1016/j.infoecopol.2012.01.001
language
English
LU publication?
no
id
883d07d0-5b75-458e-8236-ff832dccebf3
date added to LUP
2020-01-23 15:49:05
date last changed
2022-04-03 00:07:46
@article{883d07d0-5b75-458e-8236-ff832dccebf3,
  abstract     = {{<p>We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to a duopoly of residential broadband ISPs, we again find parameter values such that network neutrality regulation increases total surplus suggesting that network neutrality regulation could be warranted even when some competition is present.</p>}},
  author       = {{Economides, Nicholas and Tåg, Joacim}},
  issn         = {{0167-6245}},
  keywords     = {{AT& T; Comcast; Discrimination; Duopoly; Google; Internet; Monopoly; Network neutrality; Regulation; Two-sided markets; Verizon; L1; D4; L12; L13; C63; D42; D43}},
  language     = {{eng}},
  month        = {{06}},
  number       = {{2}},
  pages        = {{91--104}},
  publisher    = {{Elsevier}},
  series       = {{Information Economics and Policy}},
  title        = {{Network neutrality on the Internet : A two-sided market analysis}},
  url          = {{http://dx.doi.org/10.1016/j.infoecopol.2012.01.001}},
  doi          = {{10.1016/j.infoecopol.2012.01.001}},
  volume       = {{24}},
  year         = {{2012}},
}