'Net Neutrality,' Non-Discrimination and Digital Distribution of Content through the Internet

25 Pages Posted: 17 Jul 2012 Last revised: 23 Mar 2015

See all articles by Nicholas Economides

Nicholas Economides

New York University - Leonard N. Stern School of Business - Department of Economics

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Date Written: August 15, 2007

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 Classification: L1, D4, L12, L13, C63, D42, D43

Suggested Citation

Economides, Nicholas, 'Net Neutrality,' Non-Discrimination and Digital Distribution of Content through the Internet (August 15, 2007). TPRC 2007. Available at SSRN: https://ssrn.com/abstract=2110319

Nicholas Economides (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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New York, NY 10012
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HOME PAGE: http://www.stern.nyu.edu/networks/

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