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- Title
Net neutrality and investment incentives.
- Authors
Pil Choi, Jay; Byung-Cheol Kim
- Abstract
This article analyzes the effects of net neutrality regulation on investment incentives for Internet service providers (ISPs) and content providers (CPs), and their implications for social welfare. Concerning the ISPs' investment incentives, we find that capacity expansion decreases the sale price of the priority right under the discriminatory regime. Thus, contrary to ISPs' claims that net neutrality regulations would have a chilling effect on their incentive to invest, we cannot dismiss the possibility of the opposite. A discriminatory regime can also weaken CPs' investment incentives because of CPs' concern that the ISP would expropriate some of the investment benefits.
- Subjects
INVESTMENTS; INTERNET service providers; INTERNET; PUBLIC welfare; PRICES
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2010, Vol 41, Issue 3, p446
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/j.1756-2171.2010.00107.x