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Net neutrality and investment incentives

Jay Choi () and Byung-Cheol Kim ()

RAND Journal of Economics, 2010, vol. 41, issue 3, 446-471

Abstract: This article analyzes the effects of net neutrality regulation on investment incentives for Internet service providers (ISPs) and content providers (CPs), and their implications for social welfare. Concerning the ISPs' investment incentives, we find that capacity expansion decreases the sale price of the priority right under the discriminatory regime. Thus, contrary to ISPs' claims that net neutrality regulations would have a chilling effect on their incentive to invest, we cannot dismiss the possibility of the opposite. A discriminatory regime can also weaken CPs' investment incentives because of CPs' concern that the ISP would expropriate some of the investment benefits.

Date: 2010
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https://doi.org/10.1111/j.1756-2171.2010.00107.x

Related works:
Working Paper: Net Neutrality and Investment Incentives (2008) Downloads
Working Paper: Net Neutrality and Investment Incentives (2008) Downloads
Working Paper: Net Neutrality and Investment Incentives (2008) Downloads
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