A Note of Caution on Using Hotelling Models in Platform Markets

Jeitschko, Thomas D.; Kim, Soo Jin; Yankelevich, Aleksandr

doi:10.2139/ssrn.3169510

SSRN Journal

2018

DOI: 10.2139/ssrn.3169510

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A Note of Caution on Using Hotelling Models in Platform Markets

Thomas D. Jeitschko

Soo Jin Kim

Aleksandr Yankelevich

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2018

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“…In this case, we would have ρ S < ρ W in the prioritization regime which would increase the potential payment from the weak content. This would clearly reinforce our results.20 In addition to being very tractable, this timing is the one consistent with the covered market assumption, as demonstrated byJeitschko et al (2018) .…”

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confidence: 83%

Prioritization vs. Zero-Rating: Discrimination on the Internet

Gautier

Somogyi

2018

SSRN Journal

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This paper analyzes two business practices on the mobile internet market, paid prioritization and zero-rating. These practices allow the internet service provider to discriminate different content types. With prioritization, the ISP delivers content at different speeds; with zero-rating, the ISP charges different prices. In recent years these practices have attracted considerable media attention and regulatory interest. When the asymmetry between content providers is limited, in particular with regard to their ability to attract traffic or to monetize it, we first show that the ISP can extract more surplus from consumers by privileging the relatively weaker content and restoring symmetry between content providers. Next, we show that the ISP chooses prioritization when traffic is highly valuable for content providers and congestion is severe, and zero-rating in all other cases. Finally, we find that a policy banning prioritization can lead to zero-rating and a reduction in consumer surplus.

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confidence: 83%

Prioritization vs. Zero-Rating: Discrimination on the Internet

Gautier

Somogyi

2018

SSRN Journal

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show abstract