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The Evolution of Price Discrimination in Transportation and its Implications for the Internet

The Review of Network Economics

Vol. 3, Issue 3 - September 2004, pp 323-346

  Andrew Odlyzko
University of Minnesota University of Minnesota
E-mail: [email protected]

  A wide-ranging discussion of the evolution of pricing in early transportation industries, such as lighthouses, canals, and turnpikes, is presented. It shows that price discrimination was an important factor in the development of those industries, and tended to intensify with time. In order to make differential tariffs effective, service providers had the right of detailed inspection of the cargo. These historical precedents help explain the drive by large sectors of the telecommunications industry to gain greater control over what is transmitted over the Internet. The implications for the evolution of the Internet are briefly explored.

Keywords: Price Discrimination, Transportation, Internet, Telecommunications

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