The Economics of Free Internet Access

  title={The Economics of Free Internet Access},
  author={Marco A. Haan},
In an increasing number of European countries, Internet service providers offer free Internet access. Telephone companies are willing to pay these providers based on the amount of traffic they generate. In this paper, we explain these phenomena. We argue that, by offering a contract that pays the provider a certain lump sum conditional on it providing free Internet access, the telephone company solves a double marginalization problem. We analyze this in a simple model in which only the Internet… CONTINUE READING

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