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

Nicholas Economides, Joacim Tåg*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

174 Citations (Scopus)

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 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.

Original languageEnglish
Peer-reviewed scientific journalInformation Economics and Policy
Volume24
Issue number2
Pages (from-to)91-104
Number of pages14
ISSN0167-6245
DOIs
Publication statusPublished - 06.2012
Externally publishedYes
MoE publication typeA1 Journal article - refereed

Keywords

  • AT& T
  • Comcast
  • Discrimination
  • Duopoly
  • Google
  • Internet
  • Monopoly
  • Network neutrality
  • Regulation
  • Two-sided markets
  • Verizon

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