Zero-rating, network effects, and capacity investments

Steffen Hoernig; Francisco Monteiro

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: We consider internet service providers? incentives to zero-rate, i.e. do not count towards data allowances, the consumption of certain services, in the absence of payments from content providers. In a general model with various types of network effects, service substitutes or complements, monopoly and duopoly, we show that ISPs adopt zero-rating and that it increases consumer surplus and total welfare if network effects are strong enough. Capacity investment increases (decreases) with network effects if services are complements (substitutes). Under competition, the decision to zero-rate depends the residual network effect, which includes the impacts of spillovers and brand differentiation.

Keywords: Zero-rating; network effects; net neutrality; capacity investment (search for similar items in EconPapers)
JEL-codes: D21 L51 L96 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2018
New Economics Papers: this item is included in nep-com, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://run.unl.pt/bitstream/10362/82726/1/WP627.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp627

Access Statistics for this paper

More papers in Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Susana Lopes ().