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Net neutrality regulation: Much ado about nothing?

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  • Vogelsang, Ingo

Abstract

The economics literature on Net Neutrality (NN) has been largely critical of NN regulation on the basis of theoretical findings that NN violations can be both welfare improving and welfare deteriorating, depending on the circumstances of the case in question. Thus, an ex post competition policy approach would be preferable to a strict ex ante prohibition of NN violations. In contrast, the current paper argues that NN regulation is largely ineffective, in particular, when it comes to the prohibition of fast lanes and other quality of service (QoS) differentiations, and to a lesser extent, when it comes to the zero price rule. NN regulation is effective only in preventing the blocking of specific content and in preventing the favoring of ISP owned content and in preventing some price discriminations. These are also areas where NN regulations are more likely to be welfare-enhancing. Where they are ineffective, NN regulations are likely to create inefficiencies through the cost and allocative inefficiencies caused by NN bypass. The paper ends with a call for theoretical and empirical economic analyses of NN circumvention techniques.

Suggested Citation

  • Vogelsang, Ingo, 2019. "Net neutrality regulation: Much ado about nothing?," ZEW Discussion Papers 19-023, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:19023
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    References listed on IDEAS

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    Cited by:

    1. Parsons, Steve G. & Duffy-Deno, Kevin T., 2021. "Are telecommunications regulators correct in their beliefs that network size affects origination/termination?," Telecommunications Policy, Elsevier, vol. 45(2).
    2. Briglauer, Wolfgang & Stocker, Volker & Stockhammer, Paul, 2019. "Ist Netzneutralität tatsächlich gut? Eine Neubewertung vor dem Hintergrund der Regulierung in den USA und in der EU sowie aktueller Forschungsergebnisse," Policy Notes 38, EcoAustria – Institute for Economic Research.

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    More about this item

    Keywords

    net neutrality (NN); quality of service (QoS); price discrimination; content delivery network (CDN); zero-rating; throttling;
    All these keywords.

    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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