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Net Neutrality and the Incentives (Not) to Exclude Competitors

Author

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  • Dewenter Ralf

    (Department of Economics, Helmut Schmidt University Hamburg, Holstenhofweg 85, D-22043 Hamburg, Germany)

  • Rösch Jürgen

    (Department of Economics, Helmut Schmidt University Hamburg, Holstenhofweg 85, D-22043 Hamburg, Germany)

Abstract

This paper analyses the incentives of a vertical integrated Internet service provider (ISP) to block competitors from content markets. Using a simple model we find that the ISP does not block competing content providers as long as the contents are differentiated sufficiently. Exclusion only takes place when the competitor offers perfect homogeneous content and the ISP has a local monopoly over its Internet access customers or if network effects are strong. In this case, however, the abuse of market power can at least in Europe be prohibited by competition authorities. That is, according to our model there is no need for a regulation of net neutrality.

Suggested Citation

  • Dewenter Ralf & Rösch Jürgen, 2016. "Net Neutrality and the Incentives (Not) to Exclude Competitors," Review of Economics, De Gruyter, vol. 67(2), pages 209-229, August.
    • Handle: RePEc:lus:reveco:v:67:y:2016:i:2:p:209-229:n:3
    DOI: 10.1515/roe-2015-1010
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    References listed on IDEAS

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    Cited by:

    1. Juliane Fudickar, 2015. "Net Neutrality, Vertical Integration, and Competition Between Content Providers," BDPEMS Working Papers 2015014, Berlin School of Economics.
    2. Robert F. Easley & Hong Guo & Jan Krämer, 2018. "Research Commentary—From Net Neutrality to Data Neutrality: A Techno-Economic Framework and Research Agenda," Information Systems Research, INFORMS, vol. 29(2), pages 253-272, June.
    3. Vogelsang Ingo, 2018. "Net Neutrality Regulation: Much Ado about Nothing?," Review of Network Economics, De Gruyter, vol. 17(3), pages 225-243, September.
    4. Dewenter Ralf & Lüth Hendrik, 2015. "Eine alternative Definition von Suchneutralität / An alternative definition of search neutrality," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 66(1), pages 221-242, January.
    5. Stöhr, Annika & Noskova, Victoriia & Kunz-Kaltenhäuser, Philipp & Gänßle, Sophia & Budzinski, Oliver, 2019. "Happily ever after? Vertical and horizontal mergers in the U.S. media industry," Ilmenau Economics Discussion Papers 126, Ilmenau University of Technology, Institute of Economics.
    6. Broos, Sébastien & Gautier, Axel, 2017. "The exclusion of competing one-way essential complements: Implications for net neutrality," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 358-392.
    7. Broos, Sébastien & Gautier, Axel, 2014. "Competing one-way essential complements: the forgotten side of net neutrality," LIDAM Discussion Papers CORE 2014064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Kim Soo Jin, 2020. "Direct Interconnection and Investment Incentives for Content Quality," Review of Network Economics, De Gruyter, vol. 18(3), pages 169-204, September.
    9. Jan Krämer, & Daniel Schnurr,, 2018. "Is there a need for platform neutrality regulation in the EU?," Telecommunications Policy, Elsevier, vol. 42(7), pages 514-529.
    10. Neute, Nadine & Budzinski, Oliver, 2016. "Ökonomische Anmerkungen zur aktuellen Netzneutralitätspolitik in den USA," Ilmenau Economics Discussion Papers 100, Ilmenau University of Technology, Institute of Economics.
    11. Lüth Hendrik, 2015. "Toll Road or Dumb Pipe? Economic Perspectives on Net Neutrality," Review of Economics, De Gruyter, vol. 66(3), pages 303-329, December.
    12. Jan KRÄMER & Michael WOHLFARTH, 2015. "Regulating Over-the-Top Service Providers in Two-Sided Content Markets: Insights from the Economic Literature," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(99), pages 71-90, 3rd quart.
    13. Budzinski, Oliver, 2016. "Aktuelle Herausforderungen der Wettbewerbspolitik durch Marktplätze im Internet," Ilmenau Economics Discussion Papers 103, Ilmenau University of Technology, Institute of Economics.

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    More about this item

    Keywords

    net neutrality; internet service provider; content provider; blocking; platforms;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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