33
quality of service), not that they are beneficial.5 The fourth
paper, still within the sphere of non-quality-related price
distinctions, is still worse for the Commission, concluding that
“a flat ban” on price discrimination (even assuming no
differential in cost and quality, unlike the Commission rule)
“could have adverse welfare consequences,” and that “the
analysis does not reveal whether there is any implementable
form of regulation that would be welfare-improving.” Katz,
The Welfare Effects, at 165.
It is probably no coincidence that the author of three of
these articles, Michael Katz, a former chief economist at the
Commission, filed a declaration in this proceeding opposing
the type of regulation adopted in the Order as overly broad,
especially given that the behavior banned was at most
responsible for only hypothetical harms. Protecting and
Promoting Consumer Benefits Derived from the internet:
Declaration of Michael L. Katz, July 15, 2014 (“Katz
Declaration”), at 2-3. I will discuss his critique and the
alternatives he offers shortly.
The Order also points to two old Commission reports that
it claims support its argument. Order ¶ 126 n.297. They do
not. One, Jay M. Atkinson & Christopher C. Barnekov, A
Competitively Neutral Approach to Network Interconnection,
OPP Working Paper Series, No. 34, at 15 (2000), deals with
network interconnection pricing and advocates a “bill and
5
Katz, Price Discrimination, at 1454 (“uniform pricing is
more efficient than price discrimination when the number of
uninformed consumers is small”); Katz, Output and Welfare, at 37
(“there may be scope for improving market performance through
regulation” of price discrimination); Yoshida, Third Degree Price
Discrimination, at 244 (“[i]n general, we cannot expect” the
condition required for regulation to improve welfare to be true).
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