The strategic use of download limits by a monopoly platform

• Autores: Nicholas Economides, Benjamin E. Hermalin
• Localización: The Rand Journal of Economics, ISSN-e 1756-2171, Vol. 46, Nº. 2 (Summer 2015), 2015, págs. 297-327
• Idioma: inglés
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• Resumen

  • We offer a new explanation for why platforms, such as Internet service providers and mobile-phone networks, offer plans with download limits: through one of two mechanisms, doing so causes content providers to reduce prices or improve quality. This generates greater surplus for consumers, which a platform captures via higher consumer access fees. Even accounting for congestion externalities, a platform limits downloads more than would be welfare maximizing; indeed, by so much, that barring such practices can be welfare superior to what a platform would do. Paradoxically, a platform will install more bandwidth when it can restrict downloads than when it cannot.