Let's say I have something that costs me $100, and I know for a fact that (a) if I give it to you, it will make you $1000 richer and (b) you don't have access to any substitute, so you either pay the price I ask or go without.
This is what game theorists call a 'pure bargaining' [1] problem:- reaching a deal makes $900, but we have to decide how to split that between us. Both of us want as big a share as possible, but our main leverage is refusing to reach a deal.
In this situation, I am the ISP; installing a Netflix box costs me $100 for power, bandwidth, whatever. Netflix are the ones that make $1000, as installing the box lets them get more customers. ISPs refuse to install boxes because they want more money than Netflix is offering, and refusing to install is the only way to get it.
This is what game theorists call a 'pure bargaining' [1] problem:- reaching a deal makes $900, but we have to decide how to split that between us. Both of us want as big a share as possible, but our main leverage is refusing to reach a deal.
In this situation, I am the ISP; installing a Netflix box costs me $100 for power, bandwidth, whatever. Netflix are the ones that make $1000, as installing the box lets them get more customers. ISPs refuse to install boxes because they want more money than Netflix is offering, and refusing to install is the only way to get it.
[1] https://en.wikipedia.org/wiki/Bargaining