Net Neutrality and Consumer Welfare

Journal of Competition Law and Economics, Forthcoming

Posted: 24 Oct 2010  

Gary S. Becker

University of Chicago - Department of Economics; University of Chicago - Booth School of Business

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Hal Sider

affiliation not provided to SSRN

Date Written: September 1, 2010

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.

Keywords: net, neutrality

JEL Classification: K20, K21, K23, L40, L50, L51, L52, L96, L98, O31, O38

Suggested Citation

Becker, Gary S. and Carlton , Dennis W. and Sider, Hal, Net Neutrality and Consumer Welfare (September 1, 2010). Journal of Competition Law and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1695696

Gary S. Becker

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

University of Chicago - Booth School of Business

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Dennis W. Carlton (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
312-322-0215 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hal Sider

affiliation not provided to SSRN ( email )

Paper statistics

Abstract Views
948