Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/169446
Authors: 
Baake, Pio
Sudaric, Slobodan
Year of Publication: 
2017
Series/Report no.: 
28th European Regional Conference of the International Telecommunications Society (ITS): "Competition and Regulation in the Information Age", Passau, Germany, July 30 - August 2, 2017
Abstract: 
We analyze pricing and competition under paid prioritization within a model of interconnected internet service providers (ISPs), heterogeneous content providers (CPs) and heterogeneous consumers. We show that prioritization is welfare superior to a regime without prioritization (network neutrality) but yields lower incentives for investment in network capacities. As ISPs price discriminate between on-net and off-net CPs, their bottleneck property is propagated and competition for consumers increases resulting in a potential prisoner's dilemma when deciding whether to offer prioritization. We show that peering for prioritized traffic emerges as a collusive outcome and present off-net prices as a further collusive instrument.
Subjects: 
interconnection
investment
network neutrality
prioritization
JEL: 
L13
L51
L96
Document Type: 
Conference Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.