Transparency regulation in broadband markets: Lessons from experimental research

Abstract

This article presents a research project in experimental law and economics about transparency regulation in markets for experience goods, with implications for the implementation of transparency requirements in broadband markets. European and American regulators have introduced transparency policies in the broadband sector, although their effects on market actors are not fully understood. The experiment evaluates the effects of increased transparency on various market outcomes. Four scenarios are compared in which end-users have different amounts of information about quality. Findings of this research suggest that (1) more information about quality leads to higher total surplus and higher consumer surplus; (2) quality provided by firms increases with the level of transparency; and (3) quality and efficiency are marginally higher when full information about quality is only available to some consumers, than when all consumers have imperfect information about quality. To these findings a number of conclusions are attached relevant for broadband policy.