Working paper

Internet Interconnection and Network Neutrality

Jay Pil Choi, Doh-Shin Jeon, and Byung-Cheol KIM


We analyze competition between interconnected networks when content is heterogeneous in its sensitivity to delivery quality. In a two-sided market framework, we characterize the equilibrium in a neutral network constrained to offer the same quality and assess the impact of such a constraint vis-à-vis a non-neutral network where Internet service providers (ISPs) are allowed to engage in second degree price discrimination with a menu of quality-price pairs. We find that the merit of net neutrality regulation depends crucially on content providers' business models. More generally, our analysis can be considered as a contribution to the literature on second-degree price discrimination in two-sided platform markets.

JEL codes

  • D4: Market Structure and Pricing
  • L1: Market Structure, Firm Strategy, and Market Performance
  • L5: Regulation and Industrial Policy

Replaced by

Jay Pil Choi, Doh-Shin Jeon, and Byung-Cheol KIM, Net Neutrality, Business Models, and Internet Interconnection, American Economic Journal: Microeconomics, vol. 7, n. 3, 2015, pp. 103–141.

See also

Published in

TSE Working Paper, n. 12-355, November 2012