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Fear of Discrimination: Net Neutrality and Product Differentiation on the Internet

Author

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  • Liu Xingyi

    (Universität Würzburg, Sanderring 2, 97070 Würzburg, Germany)

Abstract

We study the impact of net neutrality on the content market with endogenous product differentiation. We show that when the Internet service provider is allowed to offer different connection qualities to content providers, it has incentives to favor contents that have a broader market feature. This biases content providers towards choosing those broader products, which may result in too little product differentiation in the content market. By eliminating the possibility of discrimination, net neutrality can reduce such distortion in the content market, and induce more efficient product choices. Net neutrality also raises social welfare if the extent of discrimination is relatively small compared to the extent of product differentiation.

Suggested Citation

  • Liu Xingyi, 2016. "Fear of Discrimination: Net Neutrality and Product Differentiation on the Internet," Review of Network Economics, De Gruyter, vol. 15(4), pages 211-247, December.
    • Handle: RePEc:bpj:rneart:v:15:y:2016:i:4:p:211-247:n:3
    DOI: 10.1515/rne-2017-0010
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    References listed on IDEAS

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    More about this item

    Keywords

    Net Neutrality; Product Differentiation; Quality Discrimination;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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