Net neutrality: A one-sided outcome in a two-sided market

[Commentary] Verizon’s basic argument here is almost certainly correct: figuring out the best price structure in two-sided markets is complicated, and there is little reason to believe a priori that the Open Internet rules’ prohibition on charging content providers is optimal.

To the contrary, the economic literature suggests that the Open Internet rules can have a negative effect on the value created by the Internet, and that allowing broadband ISPs to charge content providers can benefit consumers and increase infrastructure investment. … The takeaway is that today’s broadband Internet market is precisely the sort of market in which the [Federal Communications Commission]’s ‘prophylactic’ approach is inappropriate. It is, instead, one in which we should seek out opportunities to experiment with multi-sided price structure — and even reward firms for taking the risk of experimenting — in order to maximize the value of the Internet to consumers.