Net Neutrality and Investment Incentives

Title: Net Neutrality and Investment Incentives
Format: Journal Article
Publication Date: September 2010

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 ISP would expropriate some of the investment benefits.

External Contributors: Jay Pil Choi

Choi, Jay Pil and Byung-Cheol Kim. "Net Neutrality and Investment Incentives." The RAND Journal of Economics 41.3 (2010):  446-471.

  • Applied Microeconomics
  • Industrial Organization
Related Links:
Related File: Choi and Kim RAND 2010.pdf
Related Departments:
  • School of Economics