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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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    References listed on IDEAS

    as
    1. Hermalin, Benjamin E. & Katz, Michael L., 2007. "The economics of product-line restrictions with an application to the network neutrality debate," Information Economics and Policy, Elsevier, vol. 19(2), pages 215-248, June.
    2. 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.
    3. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
    4. Joshua Gans, 2015. "Weak versus strong net neutrality," Journal of Regulatory Economics, Springer, vol. 47(2), pages 183-200, April.
    5. Gans Joshua S & King Stephen P, 2003. "The Neutrality of Interchange Fees in Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Vogelsang, Ingo, 2019. "Has Europe missed the endgame of telecommunications policy?," Telecommunications Policy, Elsevier, vol. 43(1), pages 1-10.
    2. Edmond Baranes & Cuong Hung Vuong, 2020. "Investment in Quality Upgrade and Regulation of the Internet," CESifo Working Paper Series 8074, CESifo.
    3. 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.
    4. 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.
    5. 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.
    6. Jeitschko, Thomas D. & Kim, Soo Jin & Yankelevich, Aleksandr, 2021. "Zero-Rating and Vertical Content Foreclosure," Information Economics and Policy, Elsevier, vol. 55(C).
    7. Vogelsang Ingo, 2018. "Net Neutrality Regulation: Much Ado about Nothing?," Review of Network Economics, De Gruyter, vol. 17(3), pages 225-243, September.
    8. 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.
    9. 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.

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    More about this item

    Keywords

    Regulation; Net neutrality; Internet service providers; Content providers; Infrastructure investment;
    All these keywords.

    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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