An economic model of the last-mile internet

Rakesh Chaturvedi, Souvik Dutta and Kiriti Kanjilal

Journal of Economic Behavior & Organization, 2021, vol. 191, issue C, 620-638

Abstract: Pricing decisions of an internet service provider (ISP) are studied in a model based on complementarity between broadband connection and content, congestion externalities on consumer side and oligopolistic externalities on content provider side. When consumers face two-part tariffs from the ISP, the equilibrium is sensitive to usage price level but is invariant to its structure on two sides. With nonlinear pricing, the markup of content providers affects consumer prices while congestion externalities and elasticity of content demand shape the price for providers. For the zero-price rule, a neutrality-of-policy result holds with two-part tariffs but not with nonlinear pricing.

Keywords: Internet; Network neutrality; Congestion pricing; Two-part tariffs; Nonlinear pricing (search for similar items in EconPapers)
JEL-codes: D42 D43 D46 L11 L12 L13 L86 L96 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:191:y:2021:i:c:p:620-638

DOI: 10.1016/j.jebo.2021.09.025

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