Getting What You Pay for: Analyzing the Net Neutrality Debate
26 Pages Posted: 14 Jan 2008 Last revised: 21 Apr 2013
Date Written: April 20, 2008
We analyze the effects of networks offering and charging for premium transmission service, which is central to the net neutrality debate. We find that when a network provider optimally charges for and provides premium transmission for content providers, innovation is stimulated on the edges of the network and smaller content providers benefit more than do larger content providers. Furthermore, we show that the network provider increases its investment in network capacity when it offers premium transmission without degrading service for content providers that do not purchase the premium service. Also the number of network subscribers increases.
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