Economic policy analysis and the internet: Coming to terms with a telecommunications anomaly

Paul A. David

in The Oxford Handbook of Information and Communication Technologies

Published in print February 2009 | ISBN: 9780199548798
Published online September 2009 | | DOI:

Series: Oxford Handbooks in Business and Management C

 Economic policy analysis and the internet: Coming to terms with a telecommunications anomaly

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This article shows, first, that the problem of congestion which was widely perceived to be a critical economic resource allocation challenge turned out to be largely chimerical; and, second, that economists were quite blasé in proposing solutions for that and other related problems by introducing pricing mechanisms whose implementation required radical engineering modifications to the Internet. The latter, however, would jeopardize, and possibly vitiate, the unique, socially valuable performance capabilities of the system. The third section takes note of the fact that the recommendations for usage-sensitive pricing that were advanced by economists on static and rather narrow ‘efficiency’ grounds probably posed less of an actual threat to the continuation of the end-to-end design principle than the pressures that presently emanate from the private sector. The fourth section addresses the questions of whether, and on what grounds, public policy might be mobilized to protect the architecture of the Internet. The final section concludes with some observations and suggestions regarding future policy-relevant directions for Internet economics.

Keywords: economic policy; policy analysis; Internet; resource allocation; pricing mechanism; performance capabilities

Article.  9027 words. 

Subjects: Business and Management ; Business and Government

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