ISP pricing and Platform pricing interaction under net neutrality
This work addresses the underexplored interaction between ISP pricing and platform pricing for regulators and economists, but the analysis is preliminary and lacks concrete empirical validation.
The paper analyzes how net neutrality regulations interact with platform two-sided pricing, finding that under current net neutrality, platforms extract surplus from content providers, but this would not occur if ISPs could apply two-sided pricing.
We analyze the effects of enforcing vs. exempting access ISP from net neutrality regulations when platforms are present and operate two-sided pricing in their business models. This study is conducted in a scenario where users and Content Providers (CPs) have access to the internet by means of their serving ISPs and to a platform that intermediates and matches users and CPs, among other service offerings. Our hypothesis is that platform two-sided pricing interacts in a relevant manner with the access ISP, which may be allowed (an hypothetical non-neutrality scenario) or not (the current neutrality regulation status) to apply two-sided pricing on its service business model. We preliminarily conclude that the platforms are extracting surplus from the CPs under the current net neutrality regime for the ISP, and that the platforms would not be able to do so under the counter-factual situation where the ISPs could apply two-sided prices.