Abstract

http://ssrn.com/abstract=1285639
 
 

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Citations (22)



 


 



Net Neutrality and Investment Incentives


Jay Pil Choi


Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Byung-Cheol Kim


Georgia Institute of Technology

March 2010

RAND Journal of Economics, Vol. 41, No. 3, 2010

Abstract:     
This article analyzes the effects of net neutrality regulation on investment incentives for Internet service providers (ISPs) and content providers (CPs), and their implications for social welfare. Concerning the ISPs’ investment incentives, we find that capacity expansion decreases the sale price of the priority right under the discriminatory regime. Thus, contrary to ISPs’ claims that net neutrality regulations would have a chilling effect on their incentive to invest, we cannot dismiss the possibility of the opposite. A discriminatory regime can also weaken CPs’ investment incentives because of CPs’ concern that the ISP would expropriate some of the investment benefits.

Number of Pages in PDF File: 42

Keywords: Net Neutrality, Investment (Innovation) Incentives, Queuing Theory, Hold-up

JEL Classification: D4, L12, L4, L43, L51, L52

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Date posted: November 17, 2008 ; Last revised: April 21, 2013

Suggested Citation

Choi, Jay Pil and Kim, Byung-Cheol, Net Neutrality and Investment Incentives (March 2010). RAND Journal of Economics, Vol. 41, No. 3, 2010. Available at SSRN: http://ssrn.com/abstract=1285639 or http://dx.doi.org/10.2139/ssrn.1285639

Contact Information

Jay Pil Choi (Contact Author)
Michigan State University - Department of Economics ( email )
101 Marshall Hall
East Lansing, MI 48824
United States
517-353-7281 (Phone)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Byung-Cheol Kim
Georgia Institute of Technology ( email )
Atlanta, GA 30332
United States
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