Network neutrality on the Internet: A two-sided market analysis

Nicholas Economides () and Joacim Tåg

Information Economics and Policy, 2012, vol. 24, issue 2, 91-104

Abstract: We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to a duopoly of residential broadband ISPs, we again find parameter values such that network neutrality regulation increases total surplus suggesting that network neutrality regulation could be warranted even when some competition is present.

Keywords: Network neutrality; Two-sided markets; Internet; Monopoly; Duopoly; Regulation; Discrimination; AT& T; Verizon; Comcast; Google (search for similar items in EconPapers)
JEL-codes: C63 D4 D42 D43 L1 L12 L13 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (105)

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Related works:
Working Paper: Network Neutrality on the Internet: A Two-sided Market Analysis (2011)
Working Paper: Net Neutrality on the Internet: A Two-sided Market Analysis (2007)
Working Paper: Net Neutrality on the Internet: A Two-sided Market Analysis (2007)
Working Paper: Net Neutrality on the Internet: A Two-sided Market Analysis (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:24:y:2012:i:2:p:91-104

DOI: 10.1016/j.infoecopol.2012.01.001

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