The assessment: Economics of the Internet

Seen from the perspective of economics, the Internet has been widely regard ed as a major force likely to raise productivity. However, at least so far, the identifiable effects on productivity appear small and largely confined to the USA. Similar scepticism is expressed about the view that the Intern et would be naturally highly competitive. On the contrary, economies of sca le and scope plus advertising-intensive reputations create the threat of co ncentration. As a result, a pro-competitive stance for policy is required-a nd in taking such a stance policy must look over the full range of the valu e chain. Such a pro-competitive stance is, however, not sufficient. Because of other market failures and because of the need to protect democratic rig hts, a wider view of policy is essential. The fundamental policy issues fac ing the Internet are, therefore, whether it can remain open, competitive, a nd pluralistic in a context increasingly dominated by large corporations.