The Economics of Network Neutrality: Are 'Prophylactic' Remedies to Nonproblems Needed?

8 Pages Posted: 10 Jan 2012

See all articles by Gerald R. Faulhaber

Gerald R. Faulhaber

University of Pennsylvania - Wharton School

Date Written: January 9, 2012

Abstract

The Federal Communications Commission recently implemented rules to promote “network neutrality.” This paper attempts to answer three questions concerning these rules: (1) What economic problem do the rules supposedly address? What does economic theory indicate about the risks of “non-neutral” broadband Internet service? And (3), what does empirical political economy suggest is the likely outcome of the new rules? The article concludes that economic analysis does not support network neutrality regulation, in part because there is little evidence of “bad behavior” prior to the rules’ implementation. However, the rules themselves provide opportunity for industry mischief, which is already occurring.

Suggested Citation

Faulhaber, Gerald R., The Economics of Network Neutrality: Are 'Prophylactic' Remedies to Nonproblems Needed? (January 9, 2012). Regulation, Vol. 34, No. 4, p. 18, Winter 2011-2012. Available at SSRN: https://ssrn.com/abstract=1982154

Gerald R. Faulhaber (Contact Author)

University of Pennsylvania - Wharton School ( email )

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