The strategic use of download limits by a monopoly platform

Nicholas Economides () and Benjamin Hermalin

RAND Journal of Economics, 2015, vol. 46, issue 2, 297-327

Abstract: type="main">

We offer a new explanation for why platforms, such as Internet service providers and mobile-phone networks, offer plans with download limits: through one of two mechanisms, doing so causes content providers to reduce prices or improve quality. This generates greater surplus for consumers, which a platform captures via higher consumer access fees. Even accounting for congestion externalities, a platform limits downloads more than would be welfare maximizing; indeed, by so much, that barring such practices can be welfare superior to what a platform would do. Paradoxically, a platform will install more bandwidth when it can restrict downloads than when it cannot.

Date: 2015
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Citations: View citations in EconPapers (27)

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Related works:
Working Paper: The Strategic Use of Download Limits by a Monopoly Platform (2014)
Working Paper: The Strategic Use of Download Limits by a Monopoly Platform (2013)
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