ECO 481: Public Choice Theory Week 10 – Case Studies: Internet & Environment Dr. Dennis Foster

Internet Governance Created by the DOD. NSF spun off. 1992 – Congress commercializes operation. Network Solutions, Inc. manages coding. 1997 – Phase out NSI monopoly. Create ICANN for oversight.

Public Choice Issues Development of the Internet has outpaced government regulation and taxation. Plenty of rent-seeking opportunities/behaviors: Taxation by foreign governments. In U.S., we have until 2014. NSI earning monopoly rents. ICANN and special interests. FCC involvement.

Current Internet Issues Net neutrality. Another example of political rhetoric. SOPA. Raises the whole issue of what IP means. PIPA. Led to protests by Wiki, Google, et al. ACTA Is this just more of a war on trade?

Environmental Policy How do you treat externalities? Common law – nuisance & trespass. Since 1970s, federal, command & control. Treat as just a “natural” event? Coalitions often seem paradoxical. Miners (some) and environmentalists. High vs. low sulfur content coal.

Public Choice Issues Consequence of complicated rules: Prohibits business flexibility. Promotes activities of lawyers. BTW, who passes these laws? Freezes current state of technology. If applied in a discriminatory fashion, retards economic improvement. New source standards.

Rent Seeking – Clean Air Act Environmentalists get legal standing. Existing firms get exemptions. New firms are discouraged from entering. Use of BAT can’t shut down a new plant! The more complex the rules . . . The easier it is to hide business advantage. The more difficult to enforce, so the bigger their budget!!

ECO 481: Public Choice Theory Week 10 – Case Studies: Internet & Environment Dr. Dennis Foster