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Net Neutrality And Consumer Welfare

Author

Listed:
  • Gary S. Becker
  • Dennis W. Carlton
  • Hal S. Sider

Abstract

The Federal Communications Commission's proposed net neutrality rules would, among other things, prohibit broadband access providers from prioritizing traffic, charging differential prices based on the priority status, imposing congestion-related charges, and adopting business models that offer exclusive content or that establish exclusive relationships with particular content providers. The proposed regulations are motivated in part by the concern that the broadband access providers will adopt economically inefficient business models and network management practices due to a lack of sufficient competition in the provision of broadband access services. This paper addresses the competitive concerns motivating net neutrality rules and addresses the potential impact of the proposed rules on consumer welfare. We show that there is significant and growing competition among broadband access providers and that few significant competitive problems have been observed to date. We also evaluate claims by net neutrality proponents that regulation is justified by the existence of externalities between the demand for Internet access and content services. We show that such interrelationships are more complex than claimed by net neutrality proponents and do not provide a compelling rationale for regulation. We conclude that antitrust enforcement and/or more limited regulatory mechanisms provide a better framework for addressing competitive concerns raised by proponents of net neutrality.

Suggested Citation

  • Gary S. Becker & Dennis W. Carlton & Hal S. Sider, 2010. "Net Neutrality And Consumer Welfare," Journal of Competition Law and Economics, Oxford University Press, vol. 6(3), pages 497-519.
  • Handle: RePEc:oup:jcomle:v:6:y:2010:i:3:p:497-519.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhq016
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    Citations

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    Cited by:

    1. Marc Bourreau & Frago Kourandi & Tommaso Valletti, 2015. "Net Neutrality with Competing Internet Platforms," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 30-73, March.
    2. repec:eee:telpol:v:39:y:2015:i:8:p:705-716 is not listed on IDEAS
    3. Au, Man Ho, 2011. "Network neutrality: Hong Kong's perspectives," 8th ITS Asia-Pacific Regional Conference, Taipei 2011: Convergence in the Digital Age 52338, International Telecommunications Society (ITS).
    4. José Tudón, 2017. "Net effects of Net Neutrality: The case of Amazon’s Twitch.tv," Working Papers 17-14, NET Institute.

    More about this item

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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