Glimmers and Signs of Innovative Health in the Commercial Internet

Abstract

What are the signs of healthy behavior in an innovative industry, such as the commercial Internet? This essay identifies patterns of healthy innovative conduct, that is, commercial behavior indicative of an innovative industry experiencing lower prices, new services, and gains in productivity. The essay illustrates how to observe such behavior in evolving markets, such as the Internet, highlighting four signs of innovative health: economic experiments; vigorous standards competition; entrepreneurial invention; and the absence of unilateral bargaining. The essay is written in the spirit of competition policy for Internet infrastructure that takes a “third way,” one that would rely more on negotiations and guidelines. If a third way emerges, administrators will require a conceptual framework and benchmark for quickly recognizing when a market event does or does not contribute to a healthy innovative outcome.

Keywords: Internet, Economic Experiments, Standards, Entrepreneurship