nep-com New Economics Papers
on Industrial Competition
Issue of 2013‒04‒20
25 papers chosen by
Russell Pittman
US Government

  1. Old Technology Upgrades, Innovation, and Competition in Vertically Differentiated Markets By Marc Bourreau; Paolo Lupi; Fabio Manenti
  2. Vertical Relational Contracts and Trade Credit By Marta Troya-Martinez
  3. Judo Economics in Markets with Asymmetric Firms By Daniel Cracau
  4. Coexistence of small and dominant firms in Bertrand competition: Judo economics in the lab By Abdolkarim Sadrieh; Daniel Cracau
  5. Mergers, managerial incentives, and efficiencies By Jovanovic, Dragan
  6. Impossibility of market division with two-sided private information about production costs By Joao Correia-da-Silva
  7. The Impact of Resale on Entry in Second Price Auctions By Che, XiaoGang; Lee, Peter; Yang, Yibai
  8. Innovation, Reallocation and Growth By Daron Acemoglu; Ufuk Akcigit; Nicholas Bloom; William R. Kerr
  9. Standards and Innovation: Technology vs. Installed Base By Aoki, Reiko; Arai, Yasuhiro
  10. Competition and Growth: Reinterpreting their Relationship By Daria Onori
  11. “What Drives the Choice of Partners in R&D Cooperation? Heterogeneity across Sectors” By Erika Badillo; Rosina Moreno
  12. Decreasing returns, patent licensing and price-reducing taxes By Sen, Debapriya; Stamatopoulos, Giorgos
  13. On Price Taking Behaviour in a Non-renewable Resource Cartel-Fringe Game By Hassan Benchekroun; Cees Withagen
  14. Rebels without a clue? Experimental evidence on partial cartels By Clemens, Georg; Rau, Holger A.
  15. How to counter union power? Equilibrium mergers in international oligopoly By Pagel, Beatrice; Wey, Christian
  17. Search Advertising By Alexandre de Cornière
  18. Integration and Search Engine Bias By Alexandre de Cornière; Greg Taylor
  19. News Aggregators and Competition Among Newspapers in the Internet By Esfahani, Nikrooz; Jeon, Doh-Shin
  20. Online Advertising and Privacy By Alexandre de Cornière; Romain De Nijs
  21. Switching costs in competitive health insurance markets By Karine Lamiraud
  22. Tariff-Mediated Network Effects versus Strategic Discounting: Evidence from German Mobile Telecommunications By Zucchini, Leon; Claussen, Jörg; Trüg, Moritz
  23. Markets for Data By Alessandro Bonatti; Dirk Bergemann
  24. Bank bailouts, competition, and the disparate effects for borrower and depositor welfare By Calderon, Cesar; Schaeck, Klaus
  25. Net Neutrality is Imperfect and Should Remain So! By Nicolas Curien

  1. By: Marc Bourreau (Telecom Paris); Paolo Lupi (AGCOM); Fabio Manenti (University of Padova)
    Abstract: We study how the migration from an old to a new technology is affected by the access price to the old technology. We show that both the incumbent and the regulator are willing to set a very high access price to accelerate consumers' migration to the new technology. When the quality of the old technology is exogenous and the entrant dominates investment in the new technology, the old technology is completely switched off in equilibrium, whereas the old technology persists when the incumbent dominates investment. When the incumbent can decide on an endogenous upgrade of the old technology, the migration to the new technology is slowed down, and the entrant might be foreclosed.
    Keywords: Access, Investment, Vertical differentiation, Multi-product firms. JEL Codes: L1, L51, L96.
    Date: 2013–02
  2. By: Marta Troya-Martinez
    Abstract: This paper uses a vertical relational contract between two firms to explore the implications of trade credit when the ability to repay is not observed by the supplier.  Trade credit limits the supplier's possibilities to punish the cashless downstream firms and termination may be used in equilibrium.  We find that the supplier always sells too little despite having enough instruments to fix the double marginalization problem.  The downward distortion in the quantity results from the need to make the contract self-enforced and/or to tackle the asymmetric information problem.  The distortion remains even as the firms become arbitrarily patient and a larger discount factor does not necessarily translate into a larger welfare.  We show that the optimal contract resembles a simple debt contract: if the fixed repayment is met, the contract continues to the next period.  Otherwise, the manufacturer asks for the highest possible repayment and terminates for a number of periods.  The toughness of the termination policy decreases with the repayment.
    Keywords: Relational contracts, trade credit, imperfect monitoring
    JEL: C73 D82 L14
    Date: 2013–03–18
  3. By: Daniel Cracau (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: I study a game with one market incumbent and a small entrant in a duopoly with perfectly substitutable products. Firms face a sequential Bertrand competition. Limiting the initial capacity (Judo economics) is a plausible entry strategy for the small firm. If we, however, introduce asymmetry in production cost or product quality, capacity limitation can become obsolete. I derive thresholds as regards the cost and quality differences for the entrant's choice to voluntarily limit the production capacity in equilibrium. I study a market entry game with price competition and perfectly substitutable products. Limiting the initial capacity (Judo economics) is a plausible entry strategy. I show that under asymmetry in production cost or product quality, capacity limitation can become obsolete.
    Keywords: Sequential Bertrand Competition, Judo Economics, Asymmetric Firms, Cost, Quality
    JEL: D43 L11
    Date: 2013–02
  4. By: Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Daniel Cracau (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: The theory of "Judo Economics" describes an optimal entry strategy for small firms. Using a capacity limitation, small firms force dominant market incumbents to accommodate. In this article, we study the power of Judo economics as an entry strategy in different market environments. We find experimental evidence supporting the theory in the original setting with a monopolistic, dominant market incumbent. When we introduce a cost advantage for small firms, profits go down. This can be explained by incumbents responding aggressive towards large entrants. For settings with multiple market incumbents, results are reversed. There, a cost advantage strengthens small firms and pricing below the incumbents' marginal cost provides the unique entry strategy.
    Keywords: Judo economics, Market entry, Price competition, Capacity limitation, Experimental economics
    JEL: D43 L11
    Date: 2013–02
  5. By: Jovanovic, Dragan
    Abstract: We analyze the effects of synergies from horizontal mergers on managerial incentives. In contrast to synergies, efficiency gains resulting from managerial effort are not merger specific, i.e., they may be realized by all firms before and after a merger. We show that synergies suppress managerial incentives within the non-merging firms, whereas the effect on the merged firm critically depends on the number of agents employed by its principal. An important implication for merger policy is that consumer surplus may be monotonically decreasing in the synergy level, which opposes the use of an efficiency defense in merger control. --
    Keywords: Managerial Incentives,Horizontal Mergers,Antitrust,Productive Efficiency Gains,Synergies,Moral Hazard,Efficiency Defense
    JEL: D21 D86 L22 L41
    Date: 2013
  6. By: Joao Correia-da-Silva (CEF.UP and Universidade do Porto)
    Abstract: In a market with several independent cities, two firms with private information about their production costs decide whether to open a store in each city or restrict their activity to some cities. In cities where a single rm opens a store, this firm is a monopolist. In cities where both firms open stores, there is price competition with full revelation of private information. In equilibrium, both firms open stores in all the cities. Tacit collusion to divide the market is impeded because, by restraining from opening additional stores, a firm reveals its inefficiency, which triggers an attack from its rival.
    Keywords: Collusion, Market division, Two-sided private information, Adverse selection, Compromise game.
    JEL: C72 D82 L41
    Date: 2013–04
  7. By: Che, XiaoGang; Lee, Peter; Yang, Yibai
    Abstract: This paper investigates the effect of resale allowance on entry strategies in a second price auction with two bidders whose entries are sequential and costly. We first characterize the perfect Bayesian equilibrium in cutoff strategies. We then show that there exists a unique threshold such that if the reseller's bargaining power is greater (less) than the threshold, resale allowance causes the leading bidder (the following bidder) to have a higher (lower) incentive on entry; i.e., the cutoff of entry becomes lower (higher). We also discuss asymmetric bidders and the original seller's expected revenue.
    Keywords: resale; sequential entry; costly participation; Second price auctions
    Date: 2013–04
  8. By: Daron Acemoglu (Department of Economics, Massachusetts Institute of Technology); Ufuk Akcigit (Department of Economics, University of Pennsylvania); Nicholas Bloom; William R. Kerr (Entrepreneurial Management Unit, Harvard University)
    Abstract: We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A key feature is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using detailed US Census micro data on firm-level output, R&D and patenting. The model provides a good fit to the dynamics of firm entry and exit, output and R&D, and its implied elasticities are in the ballpark of a range of micro estimates. We find industrial policy subsidizing either the R&D or the continued operation of incumbents reduces growth and welfare. For example, a subsidy to incumbent R&D equivalent to 5% of GDP reduces welfare by about 1.5% because it deters entry of new high-type firms. 0n the contrary, substantial improvements (of the order of 5% improvement in welfare) are possible if the continued operation of incumbents is taxed while at the same time R&D by incumbents and new entrants is subsidized. This is because of a strong selection effect: R&D resources (skilled labor) are inefficiently used by low-type incumbent firms. Subsidies to incumbents encourage the survival and expansion of these firms at the expense of potential high-type entrants. We show that optimal policy encourages the exit of low-type firms and supports R&D by high-type incumbents and entry.
    Keywords: entry, growth, industrial policy, innovation, R&D, reallocation, selection
    JEL: E2 L1
    Date: 2013–04–13
  9. By: Aoki, Reiko; Arai, Yasuhiro
    Abstract: We present a framework to examine how a standard evolves when a standard consortium or a firm (incumbent) innovates either to improve the standard or to strengthen installed base which increases switching cost. Both investments make it more difficult for another firm (entrant) to introduce a standard, also by investing in technology improvement. We show that incumbent's strategy will differ according to if the technology is in infancy or it has matured. The incumbent will deter entry when the technology is in infancy and return from investment is high. In this case ability to raise switching cost is important since entrant also has low cost. If the technology is mature and return to investment is low, then incumbent will choose to allow entry and there is co-existence of two standards. Replacement of standard by the entrant never occurs in equilibrium.
    Keywords: standards, innovation, installed base
    Date: 2013–03
  10. By: Daria Onori (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IRES - Université Catholique de Louvain, Departement of Economics and Law, Faculty of Economics - University of Rome “La Sapienza”)
    Abstract: In this paper we modify a standard quality ladder model by assuming that R&D is driven by outsider firms and the winners of the race sell licenses over their patents, instead of entering directly the intermediate good sector. As a reward they get the aggregate profit of the industry. Moreover, in the intermediate good sector firms compete à la Cournot and it is assumed that there are spillovers represented by strategic complementarities on costs. We prove that there exists an interval of values of the spillover parameter such that the relationship between competition and growth is an inverted-U-shape.
    Keywords: quality ladder; Cournot oligopoly; strategic complementarities; competition
    Date: 2013–04
  11. By: Erika Badillo (Faculty of Economics, University of Barcelona); Rosina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: In this paper we analyse the heterogeneity in firms’ decisions to engage in R&D cooperation, taking into account the type of partner (other companies from the same group, suppliers or customers, competitors, and research institutions) and the sector to which the firm belongs (industrial or services). We use information from the Technological Innovation Panel (PITEC) for the years 2006-2008 and estimate multivariate probit models corrected for endogeneity. We find that the determinants of R&D cooperation differ between sectors. In the industrial sector, the perception of risk as an obstacle to innovation reduces the likelihood of cooperating with companies in the same group and competitors, while in the service sector it reduces cooperation with suppliers or customers. For its part, the possibility of accessing additional human resources has a significantly positive effect on cooperation with all types of partner in the service sector, but not for manufactures..
    Keywords: R&D cooperation; Choice of partners; Industrial sector; Service sector; Innovative Spanish firms. JEL classification: O30; O32; L24; L60; L80.
    Date: 2012–07
  12. By: Sen, Debapriya; Stamatopoulos, Giorgos
    Abstract: Patent licensing agreements among competing firms usually involve royalties which are often considered to be anticompetitive as they raise market prices. In this paper we propose simple tax policies than can alleviate the effect of royalties. Considering a Cournot duopoly where firms produce under decreasing returns and trade a patented technology, we show that the interaction of royalties with decreasing returns may generate the counter-intuitive result that market prices decrease in the magnitude of diseconomies of scale. In such cases there exist progressive quantity taxes on firms that weaken the effect of royalties and lower the market prices. These taxes collect sufficient revenue to compensate firms for their losses. As a result, it is possible to design deficit neutral tax-transfer schemes that strictly Pareto improve the welfare of consumers as well as firms.
    Keywords: Decreasing returns; patent licensing; royalty; progressive quantity tax; deficit neutrality
    JEL: D43 D45 H21 L24
    Date: 2013–04–16
  13. By: Hassan Benchekroun; Cees Withagen
    Abstract: We consider a nonrenewable resource game with one cartel and a set of fringe members. We show that (i) the outcomes of the closed-loop and the open-loop nonrenewable resource game with the fringe members as price takers (the cartel- fringe game à la Salant 1976) coincide and (ii) when the number of fringe firms be- comes arbitrarily large, the equilibrium outcome of the closed-loop Nash game does not coincide with the equilibrium outcome of the closed-loop cartel-fringe game. Thus, the outcome of the cartel-fringe open-loop equilibrium can be supported as an outcome of a subgame perfect equilibrium. However the interpretation of the cartel-fringe model, where from the outset the fringe is assumed to be price-taker, as a limit case of an asymmetric oligopoly with the agents playing Nash-Cournot, does not extend to the case where firms can use closed-loop strategies.
    Keywords: cartel-fringe, dominant firm versus fringe, price taking, nonrenewable resources, dynamic games, open-loop versus closed-loop strategies
    JEL: D43 Q30 L13
    Date: 2012
  14. By: Clemens, Georg; Rau, Holger A.
    Abstract: This paper provides experimental evidence on the formation of partial cartels with endogenous coordination. Firms face a coordination challenge when a partial cartel is to be formed as every firm is better off if it is not inside the cartel but is a free-riding outsider. We introduce a three-stage mechanism with communication which facilitates the formation of a cartel and respectively allows the formation of a partial cartel. All-inclusive cartels are always formed. We find that partial cartels are frequently rejected out-of-equillibrium if moutside firms profit excessively from the formation of the cartel. --
    Keywords: Partial Cartels,Coordination,Communication,Experiment
    JEL: C92 D02 L41
    Date: 2013
  15. By: Pagel, Beatrice; Wey, Christian
    Abstract: We re-examine the common wisdom that cross-border mergers are the most effective merger strategy for firms facing powerful unions. In contrast, we obtain a domestic merger outcome whenever firms are sufficiently heterogeneous (in terms of productive efficiency and product differentiation). A domestic merger unfolds a wage-unifying effect which limits the union's ability to extract rents. When asymmetries among fims vanish, then cross-border mergers are the unique equilibrium. However, they may be either between symmetric or asymmetric firms. Social welfare is never higher under a domestic merger outcome than under a cross-border merger outcome. --
    Keywords: Unionization,International Oligopoly,Endogenous Mergers,Countervailing Power
    JEL: D43 J51 L13
    Date: 2013
  16. By: Gabrielsen, Tommy Staahl (Department of Economics, University of Bergen); Johansen, Bjørn Olav (Department of Economics, University of Bergen)
    Abstract: We consider a setting where an upstream producer and a competitive fringe of producers of a substitute product may sell their products to two differentiated downstream retailers. We investigate two different contracting games; one with seller power and a second game with buyer power. In each game we characterize the minimum set of vertical restraints that make the vertically integrated profit sustainable as an equilibrium outcome, and we also characterize sufficient conditions for having interlocking relationships (i.e. no exclusion). In line with the recent literature, we focus on the performance of simple two-part tariffs, upfront payments and RPM as facilitating devices for reducing competition under both buyer and seller power. With seller power we show that minimum RPM, possibly coupled with a quantity roof, will allow the manufacturer to induce industry wide monopoly prices. With buyer power we show that monopoly prices may be induced if the retailers may use an upfront fee together with a two-part tariff and a minimum RPM.
    Keywords: resale price maintenance; seller power; buyer power; horsizontal control
    JEL: L42
    Date: 2013–04–11
  17. By: Alexandre de Cornière
    Abstract: Search engines enable advertisers to target consumers based on the query they have entered.  In a framework with horizontal product differentiation, imperfect product information and in which consumers incur search costs, I study a game in which advertisers have to choose a price and a set of relevant keywords.  The targeting mechanism brings about three kinds of efficiency gains, namely lower search costs, better matching, and more intense product market price-competition.  A monopolistic search engine charges advertisers too high a price, and has incentives to provide a suboptimal matching quality.  Competition among search engines eliminates the latter distortion, but exacerbates the former.
    Keywords: Search engine, targeted advertising, consumer search
    JEL: D43 D83 L13 M37
    Date: 2013–03–20
  18. By: Alexandre de Cornière; Greg Taylor
    Abstract: Competition authorities all over the world worry that integration between search engines (mainly Google) and publishers could lead to abuses of dominant position.  In particular, one concern is that of own-content bias, meaning that Google would bias its rankings in favor of the publishers it owns or has an interest in, to the detriment of competitors and users.  In order to investigate this issue, we develop a theoretical framework in which the search engine (i) allocates users across publishers, and (ii) competes with publishers to attract advertisers.  We show that the search engine is biased against publishers that display many ads - even without integration.  Although integration may lead to own-content bias, it can also reduce bias by increasing the value of a marginal consumer to the search engine.  Integration also has a positive effect on users by reducing the nuisance costs due to excessive advertising.  Its net effect is therefore ambiguous in general, and we provide sufficient conditions for it to be desirable or not.
    Keywords: Search engine, integration, advertising
    JEL: L1 L4 L86
    Date: 2013–03–26
  19. By: Esfahani, Nikrooz (TSE); Jeon, Doh-Shin (TSE)
    Abstract: We study how the presence of a news aggregator affects quality choices of newspapers competing on the Internet. To provide a microfoundation for the role of the aggregator, we build a model of multiple issues where each newspaper chooses quality on each issue. This model captures the "business-stealing effect" and the "readership expansion effect" of the aggregator. We find that the presence of the aggregator leads newspapers to specialize in news coverage, changes quality choices from strategic substitutes to strategic complements and is likely to increase the quality of newspapers and social welfare, with an ambiguous effect on newspapers’ profits.
    Keywords: Newspapers, News Aggregator, Internet, Quality, Strategic Substitutes, Strategic Complements, Advertising, Business-stealing, Readership expansion, Opting Out.
    JEL: D21 D43 L13 L82
    Date: 2013–04–01
  20. By: Alexandre de Cornière; Romain De Nijs
    Abstract: An online platform makes a profit by auctioning an advertising slot that appears whenever a consumer visits its website.  Several firms compete in the auction, and consumers differ in their preferences.  Prior to the auction, the platform gathers data which is statistically correlated with consumers' tastes for products.  We study the implications of the platform's decision to allow potential advertisers to access the data about consumers' characteristics before they bid.  On top of the familiar trade-off between rent extraction and efficiency, we identify a new trade-off: the disclosure of information leads to a better matching between firms and consumers, but results in a higher equilibrum price on the product market.  We find that the equilbrium price is an increasing function of the number of firms.  As the number of firms becomes large, it is always profitable for the platform to disclose the information, but this need not be efficient, because of the distortion caused by the higher prices.  When the quality of the match represents vertical shifts in the demand function, we provide conditions under which disclosure is optimal.
    Keywords: Online advertising, privacy, information disclosure, auctions
    JEL: D4
    Date: 2013–03–22
  21. By: Karine Lamiraud (Economics Department - ESSEC Business School)
    Abstract: In this paper we investigate the possible presence of switching costs when consumers are offered the opportunity to change their basic health insurance provider. We focus on the specific case of Switzerland which implemented a pure form of competition in basic health insurance markets. We identify several barriers to switching, namely choice overload, status quo bias, the possession of supplementary contracts for enrollees in bad health, firm's pricing strategies based on providing low price supplementary products, poor regulation of reserves and the limitations of the previous risk-equalization mechanism which left room for risk selection practices.
    Keywords: Brand loyalty ; Choice overload ; Competition among health insurers ; Status quo bias ; Supplementary health insurance ; Switching costs ; The Swiss case
    Date: 2013–01–01
  22. By: Zucchini, Leon; Claussen, Jörg; Trüg, Moritz
    Abstract: Mobile telecommunication operators routinely charge subscribers lower prices for calls on their own network than for calls to other networks (on-net discounts). Studies on tariff-mediated network effects suggest this is due to large operators using on-net discounts to damage smaller rivals. Alternatively, research on strategic discounting suggests small operators use on-net discounts to advertise with low on-net prices. We test the relative strength of these effects using data on tariff setting in German mobile telecommunications between 2001 and 2009. We find that large operators are more likely to offer tariffs with on-net discounts but there is no consistently significant difference in the magnitude of discounts. Our results suggest that tariff-mediated network effects are the main cause of on-net discounts.
    Keywords: Competition; Network effects; Mobile telecommunications; Pricing strategies
    JEL: D22 L11 L96
    Date: 2013–04
  23. By: Alessandro Bonatti (MIT); Dirk Bergemann (Yale University)
    Abstract: We develop a model of data provision and data pricing in an environment with strategically interacting firms. The demand for data is generated by firms which seek to tailor their product positioning, or price, to either the individual or the aggregate demand. In turn, the data provider determines the amount of information released to the individual firms and the price to access it. We derive the optimal information and pricing policy of the data provider, under either individual or aggregate tailoring by the firms. We show that frequently the optimal information policy is to provide only partial and noisy information to the competing firms. In addition, the revenue of the data provider is commonly maximized by asymmetric or even exclusive information policies.
    Date: 2012
  24. By: Calderon, Cesar; Schaeck, Klaus
    Abstract: This paper investigates how government interventions into banking systems such as blanket guarantees, liquidity support, recapitalizations, and nationalizations affect banking competition. This debate is important because the pricing of banking products has implications for borrower and depositor welfare. Exploiting data for 124 countries that witnessed different policy responses to 41 banking crises, and using difference-in-difference estimations, the paper presents the following key results: (i) Government interventions reduce Lerner indices and net interest margins. This effect is robust to a battery of falsification and placebo tests, and the competitive response also cannot be explained by alternative forces. The competition-increasing effect on Lerner indices and net interest margins is also confirmed once the non-random assignment of interventions is accounted for using instrumental variable techniques that exploit exogenous variation in the electoral cycle and in the design of the regulatory architecture across countries. (ii) Consistent with theoretical predictions, the competition-increasing effect of government interventions is greater in more concentrated and less contestable banking sectors, but the effects are mitigated in more transparent banking systems. (iii) The competitive effects are economically substantial, remain in place for at least 5 years, and the interventions also coincide with an increase in zombie banks. The results therefore offer direct evidence of the mechanism by which government interventions contribute to banks'risk-shifting behavior as reported in recent studies on bank level runs via competition. (iv) Government interventions disparately affect bank customers'welfare. While liquidity support, recapitalizations, and nationalizations improve borrower welfare by reducing loan rates, deposit rates decline. The empirical setup allows quantifying these disparate effects.
    Keywords: Banks&Banking Reform,Debt Markets,Access to Finance,Bankruptcy and Resolution of Financial Distress,Deposit Insurance
    Date: 2013–04–01
  25. By: Nicolas Curien
    Abstract: Network neutrality is often mistakenly assimilated with the non-discrimination of Internet usage. Although this rough view is acceptable at first sight, as far as blocking of content or clearly anti-competitive discrimination are concerned, it becomes confusing at second sight, when the efficiency of traffic management, on the supply side, or the differentiation of consumers’ requests, on the demand side, are considered. A neutrality principle ignoring traffic efficiency and demand differentiation through enforcing a strict homogeneity in the treatment of data packets on the network would prove inappropriate as it would downgrade the quality of service while not meeting consumers’ needs.In order to clarify the on-going debates, an unambiguous and formal definition of the concept of neutrality is required. In this contribution, a tentative definition is proposed, based on the economic principle of efficiency. Perfect neutrality is first shown as being efficient, i.e. welfare maximizing, in an ideal context C*. Then, by definition, the efficient network design in some real context C distinct from C* is called “C-imperfect neutralityâ€. Depending on the specification of context C, neutrality may involve some form of efficient discrimination and becomes a flexible concept as it translates into different settings in various technological or political environments and as it may change overtime in a given environment.This approach of “the most efficient imperfection†provides an adequate framework to discuss the main net neutrality issues presently at stake in the North-American and European scenes. Among those, we shall emphasize traffic management, segmentation of demand, funding of the next generation access networks, interference of governmental policies with networks’ operations, regulation of neutrality.
    Keywords: Net-neutrality, internet policy, economic efficiency, imperfect competition, regulation
    Date: 2013–03

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