Net neutrality and investment incentives

Jay Pil Choi, Byung Cheol Kim

Research output: Contribution to journalArticle

103 Citations (Scopus)

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 ISPwould expropriate some of the investment benefits.

Original languageEnglish
Pages (from-to)446-471
Number of pages26
JournalRAND Journal of Economics
Volume41
Issue number3
DOIs
Publication statusPublished - 2010

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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