| By: |
Nicholas Economides (Stern School of Business, New York University);
|
| Abstract: |
The vast majority of US residential consumers face a monopoly or duopoly in
broadband Internet access. Up to now, the Internet was characterized by a
regime of “net neutrality” where there was no discrimination in the price of a
transmitted information packet based on the identities of either the
transmitter or the receiver or based on the application or type of content
that it contained. The providers of DSL or cable modem access in the United
States, taking advantage of a recent regulatory change that effectively
abolished net neutrality and non-discrimination protections, and possessing
significant market power, have recently discussed implementing a variety of
discriminatory pricing schemes. This paper discusses and evaluates the
implication of a number of these schemes on prices, profits of the network
access providers and those of the complementary applications and content
providers, as well as the impact on consumers. We also discuss an assortment
of anti-competitive effects of such price discrimination, and evaluate the
possibility of imposition of net neutrality by law. |
| Keywords: |
net neutrality, Internet, price discrimination, vertical restrictions, two-sided pricing, horizontal cooperation, raising rivals’ costs |
| JEL: |
L1 D4 L12 L13 C63 D42 D43 |
| Date: |
2007–03 |
| URL: |
http://d.repec.org/n?u=RePEc:net:wpaper:0703&r=net |