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Weak versus strong net neutrality: correction and clarification

Author

Listed:
  • Joshua S. Gans

    (University of Toronto
    NBER)

  • Michael L. Katz

    (Haas School of Business)

Abstract

We correct and clarify the results of Gans (J Regul Econ 47:183–200, 2015) regarding the effects of net neutrality regulation on equilibrium outcomes in settings where a content provider sells its services to consumers for a fee. We examine both pricing and investment effects. We extend the earlier paper’s result that weak forms of net neutrality are ineffective and also show that even a strong form of net neutrality may be ineffective. In addition, we demonstrate that, when strong net neutrality does affect the equilibrium outcome, it may harm efficiency by distorting both ISP and content provider investment and service-quality choices.

Suggested Citation

  • Joshua S. Gans & Michael L. Katz, 2016. "Weak versus strong net neutrality: correction and clarification," Journal of Regulatory Economics, Springer, vol. 50(1), pages 99-110, August.
    • Handle: RePEc:kap:regeco:v:50:y:2016:i:1:d:10.1007_s11149-016-9305-7
    DOI: 10.1007/s11149-016-9305-7
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    9. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
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    Cited by:

    1. Marc Bourreau & Romain Lestage, 2019. "Net neutrality and asymmetric platform competition," Journal of Regulatory Economics, Springer, vol. 55(2), pages 140-171, April.
    2. Bauner, Christoph & Espin, Augusto, 2023. "Do subscribers of mobile networks care about Data Throttling?," Telecommunications Policy, Elsevier, vol. 47(10).
    3. Comeig, Irene & Klaser, Klaudijo & Pinar, Lucía D., 2022. "The paradox of (Inter)net neutrality: An experiment on ex-ante antitrust regulation✰," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    4. Vogelsang, Ingo, 2019. "Has Europe missed the endgame of telecommunications policy?," Telecommunications Policy, Elsevier, vol. 43(1), pages 1-10.
    5. Edmond Baranes & Cuong Hung Vuong, 2020. "Investment in Quality Upgrade and Regulation of the Internet," CESifo Working Paper Series 8074, CESifo.
    6. Edmond Baranes & Cuong Hung Vuong, 2022. "Investment in quality upgrade and regulation of the internet," Journal of Regulatory Economics, Springer, vol. 61(1), pages 1-31, February.
    7. Koning, Kendall J. & Yankelevich, Aleksandr, 2018. "From internet “Openness” to “Freedom”: How far has the net neutrality pendulum swung?," Utilities Policy, Elsevier, vol. 54(C), pages 37-45.
    8. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.
    9. Stocker Volker & Knieps Guenter, 2018. "Network Neutrality Through the Lens of Network Economics," Review of Network Economics, De Gruyter, vol. 17(3), pages 115-150, September.
    10. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
    11. Broos, Sébastien & Gautier, Axel, 2017. "The exclusion of competing one-way essential complements: Implications for net neutrality," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 358-392.
    12. Miller, Keaton & Wilson, Wesley W., 2023. "Changes in rail rates for U.S. commodity grain shipments over time," Research in Transportation Economics, Elsevier, vol. 102(C).
    13. Jeitschko, Thomas D. & Kim, Soo Jin & Yankelevich, Aleksandr, 2021. "Zero-Rating and Vertical Content Foreclosure," Information Economics and Policy, Elsevier, vol. 55(C).
    14. Reggiani, Carlo & Valletti, Tommaso, 2016. "Net neutrality and innovation at the core and at the edge," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 16-27.
    15. Joshua S. Gans & Michael L. Katz, 2016. "Net Neutrality, Pricing Instruments and Incentives," NBER Working Papers 22040, National Bureau of Economic Research, Inc.
    16. Joshua S. Gans & Michael L. Katz, 2016. "Weak versus strong net neutrality: correction and clarification," Journal of Regulatory Economics, Springer, vol. 50(1), pages 99-110, August.
    17. Vogelsang Ingo, 2018. "Net Neutrality Regulation: Much Ado about Nothing?," Review of Network Economics, De Gruyter, vol. 17(3), pages 225-243, September.
    18. Kim Soo Jin, 2020. "Direct Interconnection and Investment Incentives for Content Quality," Review of Network Economics, De Gruyter, vol. 18(3), pages 169-204, September.
    19. Jamison Mark A., 2018. "Net Neutrality Policies and Regulation in the United States," Review of Network Economics, De Gruyter, vol. 17(3), pages 151-173, September.
    20. Turgut Erkul & Sencer Ecer, 2022. "Net Neutrality in the Content Provision and Internet Service Provision Markets," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-2), pages 689-724, December.
    21. Ragil Haryanto & Imam Buchori & Nany Yuliastuti & Ibnu Saleh & Agung Sugiri & Bagus Nuari & Nisriena Rachmi Putri, 2020. "Preparedness to Implement a Spatial Plan: The Impact of the Land Cooperative in Central Bangka Regency," Sustainability, MDPI, vol. 12(24), pages 1-19, December.
    22. Michael L. Katz, 2017. "Wither U.S. Net Neutrality Regulation?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(4), pages 441-468, June.
    23. Armando J. Garcia Pires, 2021. "Net neutrality and content provision," Manchester School, University of Manchester, vol. 89(6), pages 569-593, December.

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    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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