Tag Archives: Christopher S. Yoo Barbara van Schewick Brett M. Frischmann net neutrality antitrust Internet freedom competition externalities participation Chicago School of Economics congestion congestible club go

Positive Externalities: What Yoo Ignores

frischmann.jpg It turns out Prof. Chris Yoo has been rebutted by legal scholars before:
Our article directly replies to a series of articles published by Professor Christopher Yoo on this topic. Yoo’s scholarship has been very influential in shaping one side of the debate. Yoo has mounted a sophisticated economic attack on network neutrality, drawing from economic theories pertaining to congestion, club goods, public goods, vertical integration, industrial organization, and other economic subdisciplines. Yet he draws selectively.

For example, his discussion of congestion and club goods is partial in that he ignores the set of congestible club goods that are most comparable to the Internet – public infrastructure. Yoo focuses on the negative externalities generated by users (i.e., congestion) but barely considers the positive externalities generated by users (he simply assumes that they are best internalized by network owners). Yoo appeals to vertical integration theory to support his trumpeting of ‘network diversity’ as the clarion call for the Internet, but he myopically focuses on the teaching of the Chicago School of economics and fails to consider adequately the extensive post-Chicago School literature. And so on.

In our article, we explain the critical flaws in Yoo’s arguments and present a series of important arguments that he and most other opponents of network neutrality regulation ignore.

Network Neutrality and the Economics of an Information Superhighway: A Reply to Professor Yoo, BRETT M. FRISCHMANN, Loyola University of Chicago – Law School; Fordham University – School of Law, BARBARA VAN SCHEWICK, Stanford Law School, Jurimetrics, Vol. 47, 2007, Stanford Public Law Working Paper No. 1014691, Stanford Law and Economics Olin Working Paper No. 351

Hm, “positive externalities generated by users” as in participation and ad hoc content creation.

The authors also address David P. Reed’s point that competition is not the holy grail of networking:

By focusing only on the market for last-mile broadband networks, Yoo not only neglects the importance of unfettered application-level innovation for realizing economic growth and the role of a nondiscriminatory access regime in fostering the production of a wide range of public and nonmarket goods. His argument also neglects other ways to solve the problem of broadband deployment that would not impede competition and innovation in complementary markets.