Competing one-way essential complements: the forgotten side of net neutrality

Sébastien Broos (sbroos@ulg.ac.be) and Axel Gautier (agautier@ulg.ac.be)

No 2014064, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We analyze the incentives of internet service providers (ISPs) to break net neutrality by excluding internet applications competing with their own products, a typical example being the exclusion of VoIP applications by telecom companies offering internet and voice services. Exclusion is not a concern when the ISP is a monopoly because it can extract the additional surplus created by the application through price rebalancing. When ISPs compete, it could lead to a fragmented internet where only one firm offers the application. We show that, both in monopoly and duopoly, prohibiting the exclusion of the app and surcharges for its use –a strong form of net neutrality– is not welfare improving.

Keywords: net neutrality; foreclosure; one-way essential complements (search for similar items in EconPapers)
JEL-codes: L12 L13 L51 L96 (search for similar items in EconPapers)
Date: 2014-12-15
New Economics Papers: this item is included in nep-com, nep-ict, nep-ind and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2014064

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