Working Paper: NBER ID: w20160
Authors: Joshua S. Gans
Abstract: This paper provides a framework to classify and evaluate the impact of net neutrality regulations on the allocation of consumer attention and the distribution of surplus between consumers, ISPs and content providers. While the model provided largely nests other contributions in the literature, here the focus is on including direct payments from consumers to content providers. With this additional price it is demonstrated that the type of net neutrality regulation (i.e., weak versus strong net neutrality) matters for such regulations to have real effects. In addition, we provide support for the notion that strong net neutrality may stimulate content provider investment while the model concludes that there is unlikely to be any negative impact from such regulation on ISP investment. Counter to many claims, it is argued here that ISP competition may not be a substitute for net neutrality regulation in bringing about these effects
Keywords: No keywords provided
JEL Codes: D04; D42; D43; K2; L1; L12; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| strong net neutrality (L96) | content provider investment (G24) |
| strong net neutrality (L96) | ISP profits (O34) |
| strong net neutrality (L96) | socially optimal content provider choice (H49) |
| strong net neutrality (L96) | surplus for consumers and content providers (D16) |
| strong net neutrality (L96) | ISP competition (L86) |
| strong net neutrality (L96) | socially suboptimal allocation of attention (D91) |
| strong net neutrality (L96) | shift surplus from ISPs to content providers (H22) |
| strong net neutrality (L96) | enhance content provider investments (O36) |
| strong net neutrality (L96) | ISP incentives to improve network quality (L15) |
| fast lanes (R48) | counteract effects of strong net neutrality (L96) |