Economics Of Non-Neutrality In The Internet

Net-neutrality on the Internet is the set of policies that prevents a paid or unpaid discrimination by Internet Service Providers (ISPs) among different types of transmitted data. The recent moves to change the net neutrality rules and the growing demand for data have driven the ISPs to provide differential treatment of traffic to generate additional revenue streams from Content Providers (CPs). In this thesis, we consider economic frameworks to investigate different questions about the departure toward a non-neutral regime and its possible consequences. In particular, we i) assess whether different entities of the market have the incentive to adopt a non-neutral pricing scheme; and if yes ii) what are the pricing strategies they choose; and iii) how these changes affect the Internet market. First, we investigate the incentives of different entities of the Internet market for migrating to a non-neutral regime. Thus, we consider early stages of a non-neutral Internet. We consider a diverse set of parameters for the market, e.g. market powers of ISPs, sensitivity of EUs and CPs to the quality of the content. The goal is to obtain founded insights on whether there exists a market equilibrium, the structure of the equilibria, and how they depend on different parameters of the market when the current equilibrium (neutral regime) is disrupted and some ISPs have switched to a non-neutral regime. Then, we seek to investigate frameworks using which ISPs and CPs select appropriate incentives for each other, and investigate the implications of these new schemes on the entities of the Internet market. We analyze two non-neutral frameworks. In the first framework, we focus on the price competition between ISPs in the presence of uncertainty in competition and demand when CPs, i.e. demand, is merely price taker, i.e. passive in equilibrium selection. Then, in the second framework, we consider the case in which CPs have an active role in the market, and decide on the number of resources they want to reserve/buy from ISPs based on the price ISPs quote. In this case, we also consider the coupling between limited resources and the quality of the content delivered to end-users and subsequently the strategies of the decision makers. We obtain strategies for ISPs and CPs under a variety of market dynamics.