Information technology and access to networks

Technological standards

        The Internet is a multi-layered network which is operated by a variety of participants. The Internet has come to mean a combination of standards, networks, and web applications (such as streaming and file-sharing) that have accumulated around networking technology. The emergence of the Internet coincided with the growth of a new type of organizational structure, the standards committee. Standards committees are responsible for designing critical standards for the Internet such as TCP/IP, HTML, and CSS. These committees are composed of representatives from firms, academia, and non-profit organizations. Their goal is to make decisions that advance technology while retaining interoperability between Internet components. Economists are interested in how these organizational structures make decisions and whether those decisions are optimal.

The supply of Internet access

        The commercial supply of Internet access began when the National Science Foundation removed restrictions for using the Internet for commercial purposes. During the 90's internet access was provided by numerous regional and national Internet service providers (ISPs). However, by 2014, the provision of high-speed broadband access was consolidated. About 80% of Americans can only buy 25Mbit/s from one provider and a majority only have a choice of two providers for 10Mbit/s service. Economists are particularly interested by competition and network effects within this industry. Furthermore, the availability of broadband may affect other economic outcomes such as the relative wages of skilled and unskilled workers.

Demand for the Internet

        A key issue in the economics of digitization is the economic value of Internet based services. The motivation for this question is two-fold. First, economists are interested in understanding digitization related policies such as network infrastructure investment and subsidies for Internet access. Second, economists want to measure the gains to consumers from the Internet. The revenues of Internet Service Providers provided one direct measure of the growth in the Internet economy. This is an important topic because many economists believe that traditional measures of economic growth, such as GDP, understate the true benefits of improving technology. The modern digital economy also tends to lead to rely on inputs with zero price.