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：

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互联网服务提供商的定价、竞争和内容


我们研究两个互联网服务提供商（ISP）之间的竞争，其中第一个 ISP 提供基本互联网服务，而第二个 ISP 提供互联网服务加内容，即增强服务，其中第一个 ISP 可以与内容提供商合作提供相同的服务。内容作为第二ISP。当这种合作安排发生时，内容提供商向第一个 ISP 支付传输内容的转移价格。用户的偏好不同，一般都面临三种选择：（1）从第一家ISP处购买基本的互联网服务； (2)向第二ISP购买增强服务；或者(3)从第一ISP和内容提供商共同购买增强服务。我们推导出纳什均衡的存在性和唯一性，并提供两个 ISP 和内容提供商的价格、用户量和利润的封闭式表达式。当第一个 ISP 有能力选择传输价格时，当拥塞在负载中呈线性时，第一个 ISP 设置负传输价格以期从需要增强服务的其他客户那里吸引更多收入，这永远不是最佳选择。相反，当拥塞足够超线性时，第一个 ISP 的最佳策略是设置负转移价格（补贴内容提供商）或设置高转移价格将内容提供商排除在市场之外。