Net Neutrality Regulation and the Evolution of the Internet Economy

David Evans, Aug 30, 2011

There have been a number of calls for the government to regulate internet businesses. The most prominent of these involves “net neutrality” regulation of pricing by Internet Service Providers (ISPs). In a short space of time the net neutrality debate has resulted in a voluminous and heated literature. More recently there has been demand for “search neutrality” regulation of the results displayed by search engines.

This paper makes several largely unrelated observations that policymakers could find helpful in considering the need for regulation and entertaining some of the proposals that have been offered. It presents a skeptical view that we know enough to be sure that there are market failures that should be corrected or that policymakers could know enough about the present and future of the internet economy to devise regulations that would improve social welfare.