We examine competition between two Internet Service Providers (ISPs), where the first ISP provides basic Internet service, while the second ISP provides Internet service plus content, i.e., enhanced service , where the first ISP can partner with a Content Provider to provide the same content as the second ISP. When such a partnering arrangement occurs, the Content Provider pays the first ISP a transfer price for delivering the content. Users have heterogeneous preferences, and each in general faces three options: (1) buy basic Internet service from the first ISP; (2) buy enhanced service from the second ISP; or (3) buy enhanced service jointly from the first ISP and the Content Provider. We derive results on the existence and uniqueness of a Nash equilibrium, and provide closed-form expressions for the prices, user masses, and profits of the two ISPs and the Content Provider. When the first ISP has the ability to choose the transfer price, then when congestion is linear in the load, it is never optimal for the first ISP to set a negative transfer price in the hope of attracting more revenue from additional customers desiring enhanced service. Conversely, when congestion is sufficiently super-linear, the optimal strategy for the first ISP is either to set a negative transfer price (subsidizing the Content Provider) or to set a high transfer price that shuts the Content Provider out of the market.

中文翻译：

---

互联网服务提供商的定价，竞争和内容

我们研究了两个Internet服务提供商（ISP）之间的竞争，其中第一个ISP提供基本的Internet服务，而第二个ISP提供Internet服务以及内容，即 增强服务 ，第一个ISP可以与内容提供商合作以提供与第二个ISP相同的内容。当发生这种合作安排时，内容提供商向第一ISP支付用于交付内容的转让价格。用户具有不同的偏好，并且每个人通常都面临三种选择：（1）从第一个ISP购买基本的Internet服务；（2）向第二个ISP购买增强服务；或（3）从第一家ISP和内容提供商共同购买增强服务。我们根据纳什均衡的存在和唯一性得出结果，并为两个ISP和内容提供商的价格，用户群和利润提供封闭形式的表达式。当第一个ISP有能力选择转移价格时，然后在负载呈线性增长的情况下，对于第一个ISP设置负转移价格，以期从希望增强服务的其他客户那里获得更多收入，这绝不是最佳选择。相反，当拥塞足够超线性时，第一个ISP的最佳策略是设置负的转让价格（补贴内容提供商）或设置高的转让价格以使内容提供商退出市场。