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Contribution to Book
Economic Features of the Internet and Network Neutrality
The Oxford Handbook on the Economics of Networks (2016)
  • Nicholas Economides, New York University
Abstract

We discuss the issue of a possible abolition of network neutrality and the introduction of paid prioritization by residential broadband access networks. We show that, in short run analysis where bandwidth is fixed, and in the absence of congestion, network neutrality tends to maximize total surplus. When an ISP violates network neutrality and invests the extra profits to bandwidth expansion, the presence of more bandwidth alleviates the allocative distortion, and can even reverse it. We also discuss the network neutrality issue under the assumption of congestion, and characterize the set of utility functions for which network neutrality is optimal, as well as utility functions where it is optimal to prioritize. Finally, we review regulatory rules in the United States on network neutrality.

Keywords
  • Internet,
  • pricing,
  • network neutrality,
  • price discrimination,
  • prioritization
Publication Date
2016
Editor
Yann Bramoullé, Andrea Galeotti and Brian Rogers
Publisher
Oxford University Press
Citation Information
Nicholas Economides. "Economic Features of the Internet and Network Neutrality" Oxford, EnglandThe Oxford Handbook on the Economics of Networks (2016)
Available at: http://works.bepress.com/economides/52/