Working Paper: NBER ID: w13158
Authors: Shane Greenstein
Abstract: Economic experiments yield lessons to firms that can be acquired only through market experience. Economic experiments cannot take place in a laboratory; scientists, engineers, or marketing executives cannot distill equivalent lessons from simply building a prototype or interviewing potential customers and vendors. The historical record illustrates that economic experiments were important for value creation in Internet access markets. In general, industry-wide returns from economic experiments exceed private returns, with several important exceptions. Those conclusions motivate an inquiry into whether regulatory policy can play a role in fostering the creation of value. The net neutrality debate is reinterpreted through this lens. A three part test is proposed for encouraging economic experiments from both broadband carriers and providers of complementary services.
Keywords: economic experiments; internet access; regulatory policy; net neutrality
JEL Codes: L51; L86; L96; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Economic experiments (C90) | knowledge about market value (D46) |
| knowledge about market value (D46) | firms' ability to position offerings effectively (L10) |
| firms' ability to position offerings effectively (L10) | revenue (H27) |
| industrywide returns from economic experiments (C90) | private returns (G19) |
| positive externalities (D62) | industrywide benefits from economic experiments (C90) |
| regulatory policies (G18) | incentives for conducting economic experiments (C90) |