The Economics of Free Internet Access

Marco Haan

Journal of Institutional and Theoretical Economics (JITE), 2001, vol. 157, issue 3, 359-379

Abstract: In an increasing number of European countries, Internet service providers offer free Internet access. Telephone companies are willing to pay these providers based on the amount of traffic they generate. In this paper, we explain these phenomena. We argue that, by offering a contract that pays the provider a certain lump sum conditional on it providing free Internet access, the telephone company solves a double marginalization problem. We analyze this in a simple model in which only the Internet access market is studied, and in a richer model, where the regular telephone market is also taken into account.

JEL-codes: L12 L22 L42 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (3)

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Working Paper: The economics of free internet access (2000)
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