Here we have the latest poll from a IGM’s diverse panel of economic experts. They try to be current, so with talk about net neutrality so popular right now, it is interesting to see what economists think.
A few comments from the panel:
“High bandwidth traffic imposes externalities on other users.”
“If all qualities sell at the same price, markets cannot allocate quality efficiently. Works for soap, wine, and haircuts; why not Internet?”
“Answer obvious on efficiency grounds. On distribution, use other means to redistribute to poor--not covert internet cross subsidization.”
“Seems like those who cause congestion should pay more. I know some worry that ISPs will play favorites, but that should be preventable.”
The case against Net Neutrality is the normal economic logic that pricing higher valued goods at a higher price allocates resources more efficiently. Make people pay for what they use. Otherwise, other people end up paying for what they don’t use. This is how almost every other market works.
I think the popular non-economic view is that net neutrality is keeping internet service providers raising their prices. No, it is keeping them from selling different products at different prices. We can just as well reframe the question this way and get a very different reaction from the public (and maybe some economists!),
Considering both distributional effects and changes in efficiency, it is a good idea to let companies that don’t send video or other content to consumers pay less to Internet service providers than those who want to send that traffic using faster or higher quality service.
As usual, the non-economists have no idea what they’re talking about. But there was some dissent and uncertainty considering the proposition among economists. What economic reasons could they have? The most popular cause for uncertainty,
The broadband industry does not seem to be very competitive, so allowing it to charge more to content providers may not improve the market.
This is a total side issue. The central issue is the perennial last-mile problem--the market power of the cable and phone companies.
Letting price vary with quality is good if there is enough competition. I don't know if that's true here. If not the answer is less clear.
This would be a great idea if the market for service provision was competitive, but is less obvious with our current market.
In the absence of robust competition in broadband, regulation is needed to help new applications, services and content.
There were a few other considerations, but this one by far was the most common.
The panel answered another question on net neutrality a few months back.
