Net Neutrality, Vertical Integration, and Competition Between Content Providers

Juliane Fudickar ()
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Juliane Fudickar: Freie Universität Berlin

No 2015014, BDPEMS Working Papers from Berlin School of Economics

Abstract: This paper investigates the effects of a net neutrality regulation on the competition between content providers and the investment incentives of the internet service provider. We consider a situation where the monopoly internet service provider is vertically integrated with one of the content providers, and content providers compete in prices. Without net neutrality the vertical integrated firm can prioritise the delivery of its own content. We find that, under prioritisation, the integrated internet service provider and consumers as a whole are unambiguously better off. The competing content providers might also be better off under prioritisation if the congestion intensity is high. From a social welfare perspective prioritisation is also desirable unless product differentiation and congestion intensity are low. Contrary to some claims by internet service providers, we find that investment incentives are not always higher under prioritisation.

Keywords: Vertical integration; Network neutrality; Competition; Investment (search for similar items in EconPapers)
JEL-codes: L13 L41 L42 L88 (search for similar items in EconPapers)
Date: 2015-09-07
New Economics Papers: this item is included in nep-com, nep-ict, nep-mkt, nep-net and nep-reg
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bdp:wpaper:2015014

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