Asymmetric Neutrality Regulation and Innovation at the Edges: Fixed vs. Mobile Networks

41 Pages Posted: 7 Oct 2014  

Jay Pil Choi

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

Doh-Shin Jeon

Toulouse School of Economics (TSE); Centre for Economic Policy Research (CEPR)

Byung-Cheol Kim

Georgia Institute of Technology

Multiple version iconThere are 2 versions of this paper

Date Written: September 29, 2014

Abstract

We study how net neutrality regulations affect a high-bandwidth content provider’s (CP) investment incentives in quality of services (QoS). We find that the effects crucially depend on network capacity levels. With limited capacity, as in mobile networks, prioritized delivery services are complementary to the CP’s investments and can facilitate entry of congestion-sensitive content; however, this creates more congestion for other existing content. By contrast, if capacity is relatively large, as in fixed-line networks, prioritized services reduce QoS investment as they become substitutes, but improves traffic management. These results are qualitatively robust to the extension of the ISP’s endogenous choice of network capacity.

Keywords: net neutrality, asymmetric regulation, quality of service, investment incentives, queuing, congestion, mobile/fixed networks

JEL Classification: D40, K20, L10, L50, O30

Suggested Citation

Choi, Jay Pil and Jeon, Doh-Shin and Kim, Byung-Cheol, Asymmetric Neutrality Regulation and Innovation at the Edges: Fixed vs. Mobile Networks (September 29, 2014). CESifo Working Paper Series No. 4974. Available at SSRN: https://ssrn.com/abstract=2506541

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

Doh-Shin Jeon

Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Byung-Cheol Kim

Georgia Institute of Technology ( email )

Atlanta, GA 30332
United States

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