Welfare effects of network neutrality in mobile Internet market

ABSTRACT

The network neutrality can enhance the profitability of content providers but reduce carrier platforms’ profits and consumer surplus. What is more, network neutrality can improve the total social welfare level when the external utility of mobile phone users to content providers is greater than that of content providers to those users. In addition, it is also found that both profitability of content providers and pricing power of carrier platforms for mobile phone users are directly proportional to the basic utility that carriers themselves can provide.

KEYWORDS:

• Mobile Internet market
• two-sided market
• network neutrality
• welfare effect

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. We Chat has complementary and alternative effects on the mobile carriers’ business. In terms of data business, WeChat can bring data revenue to mobile carriers with complementarity. In traditional business, WeChat is alternative.