osewalrus (osewalrus) wrote,

latest econ magnum opus

Why allowing broadband ISPs will screw up the internet as a matter of Econ 101.

I wish econ were simpler, but it ain't. Still, this lacks even the math of my cable market power for dummies piece.

The one flaw is that it is all theoretical. But I would need $50K-$100K or so to set up some games and let grad students play it out over the weekend (ideally running multiple games to test different variables). I confess I'm not 100% sure at this point if assuming a gigabit pipe, the basic assumptions still hold. In that universe, the value of Whitacre tiering may be so minimal, as compared to the expense of conducting the transactions, that it simply doesn't happen as a matter of economic efficiency. OTOH, I also hold with the "inefficient monopolist" theory, that the monopolist (or oligopolist) may not recognize the economically rational thing to do.

At least Coase is understandable without the math. The basic theory of the logic of the Firm should hold here.

Late. Babbling.

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