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Media Diversity, Advertising and Net Neutrality

Pires, Armando J. Garcia
Working paper
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URI
http://hdl.handle.net/11250/295761
Date
2015-03
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  • Working papers (SNF) [809]
Abstract
In this paper, we analyze the effects of net neutrality on media

diversity. We show that in the net neutrality regime, media firms al-

ways provide media diversity, whereas in the no net neutrality regime,

the equilibrium of the model depends on the relation between net-

work capacity and network traffic. If the network capacity is large

relatively to network traffic, the equilibrium of the no net neutrality

regime is similar to the one under the net neutrality regime. However,

if network capacity is small relative to network traffic, under the no

net neutrality regime media firms do not provide media diversity. The

reason is that when network capacity is small relative to network traf-

fic, the no net neutrality regime hinders competition. In other words,

with no net neutrality, the media firm with priority sees its hinter-

land more protected from its rival than under net neutrality, and the

contrary for the firm with no priority. As a result, while the media

firm with priority has less need to provide media diversity to attract

demand and as such advertising revenues, the media firm with no pri-

ority finds it more difficult to use media diversity to attract demand

and advertising revenues.
Publisher
SNF
Series
Working paper;04/15

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