ShanghaiTech SEM Working Paper No. 2021-011
Soo Jin Kim
Central Univeristy of Finance and Economics
We study how net neutrality regulation on the content-provider side interacts with net neutrality on the internet-user side. We set up a theoretical model in which deviations from net neutrality take the form of price discrimination triggered either directly by asymmetries across content providers or indirectly by the content preferences of internet users. We show that unconstrained discrimination yields higher welfare than full net neutrality in which discrimination is banned on both sides of the market. However, net neutrality on the user side may dominate unconstrained discrimination. These results are driven by consumption reallocation effects within the content and user sides and by matching effects between them whose direction and relative intensity depend on the balance of
the network effects.
Date Written: December 2, 2021
Available at SSRN: https://ssrn.com/abstract=3976072
Download this paper: 【No. 2021-011】Net Neutrality and Welfare Effects of Discrimination.pdf