Today's Quote 08.30.06

Absent regulation to the contrary, it makes perfect economic sense for the few broadband providers in the market to exploit their market position and extract additional rents from suppliers of content and services on one end and captive customers on the other. I just happen to think that allowing these providers to exercise their market power would be a disaster for democracy and a disaster for our economy.

Reasonable minds can differ, of course, on my economic analysis and whether network neutrality is a cure worse than the disease. Nor do I expect the paid shills and true believers to look at the AWS auction results and proclaim “how wrong we were to assume that competition exists or is likely to emerge absent some form of government intervention, given the power of incumbents to block new entrants!” But I do point to the recent AWS auction as proof of two central tenants in my analysis: the behavior of profit seeking firms is predictable using undergraduate level economics and a willingness to embrace empirical data over theory, incumbents will do what they can to block the emergence of potentially disruptive new entrants, and — absent some form of government action — they will succeed.

You may still decide this produces a better world than “government intervention in the market” does. But don’t kid yourself about the world you’re going to get as a result.