IDEAS home Printed from https://ideas.repec.org/p/net/wpaper/1714.html
   My bibliography  Save this paper

Net effects of Net Neutrality: The case of Amazon’s Twitch.tv

Author

Listed:
  • José Tudón

    (Department of Economics, The University of Chicago, 1126 E. 59th St., Chicago, IL 60637, USA)

Abstract

Net neutrality encourages content provision but also creates congestion externalities from the increase in data traffic. I study the consequences of net neutrality in Twitch.tv, a popular internet platform, by estimating a two-sided market model that considers the interactions between content provision, its consumption and congestion. The platform is non-neutral because it gives preference to the most popular content providers by compressing their data, which makes them accessible to more consumers. I use the estimated preferences and technological parameters to study the counterfactual where net neutrality is imposed in the platform. Consumer welfare would drop 3 percent. The platform would need to significantly increase its investment in its physical infrastructure to compensate consumers for the drop. The drop will be underestimated if congestion is ignored. Content provision does not increase but its quality drops.

Suggested Citation

  • José Tudón, 2017. "Net effects of Net Neutrality: The case of Amazon’s Twitch.tv," Working Papers 17-14, NET Institute.
    • Handle: RePEc:net:wpaper:1714
    as

    Download full text from publisher

    File URL: http://www.netinst.org/Tudon_17-14.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Olsen, Randall J, 1980. "A Least Squares Correction for Selectivity Bias," Econometrica, Econometric Society, vol. 48(7), pages 1815-1820, November.
    2. Nicholas Economides & Benjamin E. Hermalin, 2012. "The economics of network neutrality," RAND Journal of Economics, RAND Corporation, vol. 43(4), pages 602-629, December.
    3. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
    4. Gary S. Becker & Dennis W. Carlton & Hal S. Sider, 2010. "Net Neutrality And Consumer Welfare," Journal of Competition Law and Economics, Oxford University Press, vol. 6(3), pages 497-519.
    5. Caves, Kevin W., 2012. "Modeling the welfare effects of net neutrality regulation: A Comment on Economides and Tåg," Information Economics and Policy, Elsevier, vol. 24(3), pages 288-292.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szabó, Andrea & Pham, Vinh, 2022. "Net neutrality and consumer demand in the video on-demand market," Information Economics and Policy, Elsevier, vol. 61(C).
    2. Jamison Mark A., 2018. "Net Neutrality Policies and Regulation in the United States," Review of Network Economics, De Gruyter, vol. 17(3), pages 151-173, September.
    3. José Francisco Tudón Maldonado, 2017. "Congestion v Content Provision in Net Neutrality: The Case of Amazon's Twitch.tv," 2017 Papers ptu168, Job Market Papers.
    4. José Tudón, 2022. "Prioritization vs. congestion on platforms: evidence from Amazon's Twitch.tv," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 328-355, June.
    5. Michelle Connolly & Clement Lee & Renhao Tan, 2017. "The Digital Divide and Other Economic Considerations for Network Neutrality," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(4), pages 537-554, June.
    6. Yotam Harchol & Dirk Bergemann & Nick Feamster & Eric Friedman & Arvind Krishnamurthy & Aurojit Panda & Sylvia Ratnasamy & Michael Schapira & Scott Shenker, 2020. "A Public Option for the Core," Cowles Foundation Discussion Papers 2245, Cowles Foundation for Research in Economics, Yale University.
    7. Saruta, Fuyuki, 2021. "Effects of Vertical Integration on Internet Service Providers' Zero-rating Choice," MPRA Paper 110288, University Library of Munich, Germany.
    8. Koning, Kendall J. & Yankelevich, Aleksandr, 2018. "From internet “Openness” to “Freedom”: How far has the net neutrality pendulum swung?," Utilities Policy, Elsevier, vol. 54(C), pages 37-45.
    9. Briglauer, Wolfgang & Stocker, Volker & Stockhammer, Paul, 2019. "Ist Netzneutralität tatsächlich gut? Eine Neubewertung vor dem Hintergrund der Regulierung in den USA und in der EU sowie aktueller Forschungsergebnisse," Policy Notes 38, EcoAustria – Institute for Economic Research.
    10. Robb, Genna & Hawthorne, Ryan, 2019. "Net neutrality and market power: The case of South Africa," Telecommunications Policy, Elsevier, vol. 43(9).
    11. Marc Bourreau & Frago Kourandi & Tommaso Valletti, 2015. "Net Neutrality with Competing Internet Platforms," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 30-73, March.
    12. 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.
    13. Soohyun Cho & Liangfei Qiu & Subhajyoti Bandyopadhyay, 2016. "Should Online Content Providers Be Allowed To Subsidize Content?—An Economic Analysis," Information Systems Research, INFORMS, vol. 27(3), pages 580-595.
    14. Armando J. Garcia Pires, 2021. "Net neutrality and content provision," Manchester School, University of Manchester, vol. 89(6), pages 569-593, December.
    15. Marc Bourreau & Romain Lestage, 2019. "Net neutrality and asymmetric platform competition," Journal of Regulatory Economics, Springer, vol. 55(2), pages 140-171, April.
    16. Lorenzon, Emmanuel, 2022. "Zero-rating, content quality, and network capacity," Information Economics and Policy, Elsevier, vol. 58(C).
    17. Baake, Pio & Sudaric, Slobodan, 2019. "Net neutrality and CDN intermediation," Information Economics and Policy, Elsevier, vol. 46(C), pages 55-67.
    18. Chaturvedi, Rakesh & Dutta, Souvik & Kanjilal, Kiriti, 2021. "An economic model of the last-mile internet," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 620-638.
    19. Barrie R. Nault & Steffen Zimmermann, 2019. "Balancing Openness and Prioritization in a Two-Tier Internet," Information Systems Research, INFORMS, vol. 30(3), pages 745-763, September.
    20. Gautier, Axel & Somogyi, Robert, 2020. "Prioritization vs zero-rating: Discrimination on the internet," International Journal of Industrial Organization, Elsevier, vol. 73(C).

    More about this item

    Keywords

    Net neutrality; Congestion externalities; Internet; Two-sided markets;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:net:wpaper:1714. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nicholas Economides (email available below). General contact details of provider: http://www.NETinst.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.