Technological Infrastructure in Information Technology Industries

Abstract

Both traditional and modern uses of the term infrastructure are related to “synergies”, what economists call positive externalities, that are incompletely appropriated by the suppliers of goods and services within an economic system. The traditional idea of infrastructure was derived from the observation that the private gains from the construction and extension of transportation and communication networks, while very large, were also accompanied by additional large social gains. Thus, society as a whole had an interest in promoting these networks because they created new opportunities for economic choice and growth through spillovers that were involuntary in the sense that they could neither be avoided nor entirely captured by the creators of transportation and communication networks.¹ Over the past century, publicly regulated and promoted investments in these types of infrastructure have been so large, and the resulting spread of competing transportation and communications modalities have become so pervasive, that they have come to be taken as a defining characteristic of industrialized nations. The size and pervasiveness of these traditional infrastructures is now so great that they no longer command the social attention and priority that previously supported their public subsidization and regulation.