Somogyi’s paper in the International Journal of Industrial Organization

The paper “Prioritization vs zero-rating: Discrimination on the internet” by Robert Somogyi (joint with Axel Gautier) has been published recently in the International Journal of Industrial Organization.

Click here for free access to the article until Nov 15th.

The authors compare two business practices on the mobile internet market, paid prioritization and zero-rating. These practices are tools for the internet service provider (ISP) to alter competition on the content market. Both violate the principle of net neutrality, but the paper shows that their effects on consumer welfare are fairly different. In particular, it finds that a policy banning prioritization (a policy currently followed by the EU and also the US until 2016) can lead to zero-rating (if allowed) and a reduction in consumer surplus. Finally, the paper also shows that despite the fears of net neutrality advocates about excluding lawful content, the ISP can extract more surplus from consumers by privileging the relatively weaker content, at least when asymmetry between content types is limited.

Somogyi’s project awarded a NET Institute Summer Grant

Deceptive Products on Platforms, Robert Somogyi’s joint project with Johannes Johnen (CORE, UCLouvain) has received a NET Institute Summer Grant.

The project investigates online platforms’ incentives to educate consumers about hidden prices that sellers may try charging them.  When will Skyscanner or Google Flights warn consumers about large additional luggage fees? What are the incentives of Amazon and eBay to show shipping fees or VAT in the initial search results? The first draft of the paper analyzing these issues will be available in the Fall as a NET Institute Working Paper. 

The NET Institute funds a number of scientific research projects in the area of network industries, including wired and wireless networks, “virtual networks,” electronic commerce, telecommunications, the Internet, platforms, and two-sided markets. It is expected that funded research will eventually be published in top academic research journals. The NET Institute’s board of directors consists of

  1. Dr. Vinton G. Cerf, Vice President & Chief Internet Evangelist, Google
  2. Professor Nicholas Economides, Stern School of Business, New York University (Executive Director)
  3. David A. Heiner,Vice President & Deputy General Counsel, Microsoft Corporation
  4. Dr. Nathan Myhrvold, CEO, Intellectual Ventures
  5. Professor Ariel Pakes, Economics Department, Harvard University.

Kóczy’s paper in Energy Economics

Energy EconomicsRegulated third party access (TPA) obliges the owner of an infrastructure, such as a natural gas pipeline to make it available for any user for a fee. If we want to model the European pipeline network with TPA, we must consider externalities. Kóczy’s paper titled “Modeling transfer profits as externalities in a cooperative game-theoretic model of natural gas networks” (joint with Dávid Csercsik, Franz Hubert and Balázs Sziklai) recently published in Energy Economics uses a simple partition function form game to model it. The paper is downloadable for free for 50 days.