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Commercialization of the Internet: The Interaction of Public Policy and Private Choices

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  • Shane Greenstein

Abstract

Why did commercialization of the Internet develop so well? This paper examines events in the Internet access market as a window on this broad question. The study emphasizes four themes. First, commercializing Internet access did not give rise to many of the anticipated technical and operational challenges. Entrepreneurs quickly learned that the Internet access business was commercially feasible. Second, Internet access was malleable as a technology and as an economic unit. Third, privatization fostered attempts to adapt the technology in new uses, new locations, new market settings, new applications, and in conjunction with other lines of business. These went beyond what anyone would have forecast by examining the uses for the technology prior to 1992. Fourth, and not trivially, the National Science Foundation was lucky in one specific sense. The Internet access industry commercialized at a propitious moment, at the same time as the growth of an enormous new technological opportunity, the World Wide Web. As it turned out, the Web thrived under market-oriented, decentralized, and independent decision making. The paper draws lessons for policies governing the commercialization of other government-managed technologies and for the Internet access market's moving forward.

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Paper provided by Institute for Policy Resarch at Northwestern University in its series IPR working papers with number 00-11.

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Handle: RePEc:wop:nwuipr:00-11

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Cited by:
  1. Jonathan Baker & Mark Bykowsky & Patrick DeGraba & Paul LaFontaine & Eric Ralph & William Sharkey, 2011. "The Year in Economics at the FCC, 2010–11: Protecting Competition Online," Review of Industrial Organization, Springer, Springer, vol. 39(4), pages 297-309, December.
  2. Downes, Tom & Greenstein, Shane, 2007. "Understanding why universal service obligations may be unnecessary: The private development of local Internet access markets," Journal of Urban Economics, Elsevier, vol. 62(1), pages 2-26, July.
  3. Greenstein, Shane, 2000. "Building and Delivering the Virtual World: Commercializing Services for Internet Access," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 48(4), pages 391-411, December.
  4. Downes, Tom & Greenstein, Shane, 2002. "Universal access and local internet markets in the US," Research Policy, Elsevier, Elsevier, vol. 31(7), pages 1035-1052, September.
  5. Shane Greenstein, 2006. "Innovation and the Evolution of Market Structure for Internet Access in the United States," Discussion Papers, Stanford Institute for Economic Policy Research 05-018, Stanford Institute for Economic Policy Research.

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