Zero-rating and network effects

Steffen Hoernig and Francisco Monteiro

Economics Letters, 2020, vol. 186, issue C

Abstract: We consider internet service providers’ incentives to zero-rate, i.e. to not count the usage of certain services towards data allowances, in the absence of payments from content providers. We show that zero-rating is adopted if and only if it strongly increases subscriptions. For this it is necessary that participation (as opposed to usage) network effects are strong enough and if zero-rating offers raise expectations about other subscribers’ usage. Zero-rating then also maximizes total welfare.

Keywords: Zero-rating; Network effects; Net neutrality (search for similar items in EconPapers)
JEL-codes: D21 L51 L96 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176519304124
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Zero-Rating and Network Effects (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519304124

DOI: 10.1016/j.econlet.2019.108813

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().