Reference

Jay Pil Choi, Doh-Shin Jeon, and Byung-Cheol Kim, Internet Interconnection and Network Neutrality, IDEI Working Paper, n. 753, November 2012.

Abstract

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.

JEL codes

  • D4: Market Structure and Pricing
  • L1: Market Structure, Firm Strategy, and Market Performance
  • L5: Regulation and Industrial Policy

Research partnership

Orange

Replaced by

Jay Pil Choi, Doh-Shin Jeon, and Byung-Cheol Kim, Net Neutrality, Business Models, and Internet Interconnection, American Economic Journal: Microeconomics, vol. 7, n. 3, 2015, pp. 103–141.