Research Article
Network Regulations and Market Entry
@INPROCEEDINGS{10.1007/978-3-642-30373-9_8, author={Galina Schwartz and John Musacchio and Mark Felegyhazi and Jean Walrand}, title={Network Regulations and Market Entry}, proceedings={Game Theory for Networks. 2nd International ICST Conference, GAMENETS 2011, Shanghai, China, April 16-18, 2011, Revised Selected Papers}, proceedings_a={GAMENETS}, year={2012}, month={10}, keywords={network neutrality two-sided markets market entry}, doi={10.1007/978-3-642-30373-9_8} }- Galina Schwartz
John Musacchio
Mark Felegyhazi
Jean Walrand
Year: 2012
Network Regulations and Market Entry
GAMENETS
Springer
DOI: 10.1007/978-3-642-30373-9_8
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.
