Zero-rating and network effects
Steffen Hoernig () and
Economics Letters, 2020, vol. 186, issue C
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)
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Working Paper: Zero-Rating and Network Effects (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519304124
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