Net neutrality and innovation at the core and at the edge |
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| Institution: | 1. School of Social Sciences, University of Manchester, UK;2. Imperial College London, University of Rome II and CEPR. Address: Imperial College Business School, South Kensington Campus, London SW7, 2AZ, UK;1. Berglas School of Economics, Tel Aviv University, Israel\n;2. Coller School of Management, Tel Aviv University, Israel\n;1. Johann Wolfgang Goethe University Frankfurt, Germany;2. Imperial College London, United Kingdom;1. Aix-Marseille University, Aix-Marseille School of Economics, CNRS, EHESS, France;2. Department of Economics, McGill University, Montreal H3A 2T7, Canada;3. Cef.up, Economics Department, University of Porto, Portugal;1. Department of Economics, Yokohama National University, 79-4 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan;2. Graduate School of Social Sciences, Tokyo Metropolitan University, Japan |
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| Abstract: | How would abandoning Internet net neutrality affect content providers that have different sizes? We model an Internet broadband provider that can offer a different quality of service (priority) to heterogeneous content providers. Internet users can potentially access all content, although they browse and click ads with different probabilities. Net neutrality regulation effectively protects innovation done at the edge by small content providers. Prioritization, instead, increases both infrastructure core investment and welfare only if it sufficiently stimulates innovation from the large content provider. |
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