Monday, June 6, 2011
Posted by D. Daniel Sokol
Edmond Baranes and Jean-Christophe Poudou, University Montpellier, discuss Internet access and investment incentives for broadband service providers.
ABSTRACT: This paper studies a model of the Internet broadband market as a platform in order to show how different pricing schemes from the so-called "net neutrality " can increase economic efficiency by allowing more investment of access providers and enhancing consumers surplus and social welfare. We show that departing from the "net neutrality", where flat rates are used, introducing termination fees can increase incentives to invest for the ISP and enhance social surplus.