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Net Neutrality on the Internet: A Two-Sided Market Analysis Nicholas Economides, Stern School of Business Joacim Tåg, Swedish School of Economics and Business Administration Download the Paper (PDF format) - September 1, 2007 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing. ABSTRACT: We discuss the benefits of net neutrality regulation in the context of a two-sided market model in which platforms sell Internet access services to consumers and may set fees to content and applications providers "on the other side" of the Internet. When access is monopolized, we find that generally net neutrality regulation (that imposes zero fees "on the other side" of the market) increases total industry surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content and applications providers. Similarly, we find that imposing net neutrality in duopoly increases total surplus compared to duopoly competition between platforms that charge positive fees on content providers. We also discuss the incentives of duopolists to collude in setting the fees "on the other side" of the Internet while competing for Internet access customers. Additionally, we discuss how price and non-price discrimination strategies may be used once net neutrality is abolished. Finally, we discuss how the results generalize to other two-sided markets. SUGGESTED CITATION: Nicholas Economides and Joacim Tåg, "Net Neutrality on the Internet: A Two-Sided Market Analysis" (September 1, 2007). New York University School of Law. New York University Law and Economics Working Papers. Paper 108. http://lsr.nellco.org/nyu/lewp/papers/108 | REPOSITORY HOME  | SEARCH  | MY ACCOUNT  | NELLCO HOME | Powered by bepress.