Economic Experiments and Neutrality in Internet Access
Economic experiments yield lessons to firms that can be acquired only through market experience. Economic experiments cannot take place in a laboratory; scientists, engineers, or marketing executives cannot distill equivalent lessons from simply building a prototype or interviewing potential customers and vendors. The historical record illustrates that economic experiments were important for value creation in Internet access markets. In general, industry-wide returns from economic experiments exceed private returns, with several important exceptions. Those conclusions motivate an inquiry into whether regulatory policy can play a role in fostering the creation of value. The net neutrality debate is reinterpreted through this lens. A three part test is proposed for encouraging economic experiments from both broadband carriers and providers of complementary services.
The Searle Foundation provided support. I thank Scott Stern and Kristina Steffensen McElharen for providing numerous comments and guidance throughout the writing. I am grateful for comments from seminar audiences, and from Robert Cannon, Ben Jones, Brian Kahin, Paul Ohm, Bill Rogerson, Christian Sandvig, Alicia Shems, Jim Speta, Phil Weiser, and Joel West. I am responsible for all errors. Contact: firstname.lastname@example.org, 2001 Sheridan Road, Evanston, IL, 60208. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Economic Experiments and Neutrality in Internet Access, Shane Greenstein. in Innovation Policy and the Economy, Volume 8, Jaffe, Lerner, and Stern. 2007