Chapter 1. Paid Peering and Investment Incentives for Network Capacity and Content DiversityThis paper analyzes the effects of industry practice, the “paid peering” agreement, on conflicting incentives to invest in Internet network delivery quality and content diversity and on social welfare. I find that an Internet Service Provider is more likely to invest in network capacity to improve delivery quality under a paid peering agreement. On the other hand, Content Providers tend to invest in content diversity under settlement-free peering regimes because of hold-up problems. Due to the conflicting effects of paid peering on investment incentives, the overall effect on social welfare is ambiguous, depending largely on the extent to which consumers value network quality and content diversity.Chapter 2. Privacy, Information Acquisition, and Market CompetitionThis paper analyzes how the endogenous availability of personal information affects market outcomes in a two-sided market where sellers target advertisements to individuals who have varying privacy concerns. I focus on how a market entrant that has worse targeting technology than an incumbent is affected by a lack of information. I show that an entrant is disproportionately affected by consumers’ privacy concerns. The welfare analysis shows that privacy concerns and the resulting market outcomes may lower consumer surplus and social welfare. Therefore, individually optimal decisions on data disclosure might not be socially optimal when aggregated. The empirical evidence, which is based on Google Android App Market data, corroborates the hypotheses in the model and the effectiveness of specific policy remedies that are derived from the theoretical findings.Chapter 3. Zero-Rating and Vertical Content ForeclosureWe study zero-rating, a practice whereby an Internet service provider (ISP) that limits retail data consumption exempts certain content from that limit. This practice is particularly controversial when zero-rated services are provided by an ISP that is vertically integrated into content because the data limit and ensuing overage charges impose an additional cost on rival content. As we show, the incentives to offer zero-rating and the resulting welfare consequences with and without vertical integration depend on two factors (i) the degree of differentiation between content providers’ services and (ii) whether or not the ISP can charge zero-rated content providers for exempting their data from the limit.
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