Abstract
This paper uses a two-sided market model to study if last-mile access providers (ISPs), should charge content providers (CPs), who derive revenue from advertisers, for the right to access ISP’s end-users. We compare two-sided pricing (ISPs could charge CPs for content delivery) with one-sided pricing (neutrality regulations prohibit such charges). Our analysis indicates that number of CPs is lower, and the number of ISPs often higher, with two- rather than one-sided pricing. From our results the superiority of one regime over the other depends on parameters of advertising rates, end-user demand, CPs’ and ISPs’ costs, and relative importance of their investments. Thus, caution should be taken in designing neutrality regulations.
This research is supported by NSF grants CNS-0910695, CNS-0953884, and CNS-0910711.
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© 2012 ICST Institute for Computer Science, Social Informatics and Telecommunications Engineering
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Schwartz, G., Musacchio, J., Felegyhazi, M., Walrand, J.C. (2012). Network Regulations and Market Entry. In: Jain, R., Kannan, R. (eds) Game Theory for Networks. GameNets 2011. Lecture Notes of the Institute for Computer Sciences, Social Informatics and Telecommunications Engineering, vol 75. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-30373-9_8
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DOI: https://doi.org/10.1007/978-3-642-30373-9_8
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