An Economic Theory of Infrastructure and Commons Management

Abstract

"The open access (commons) versus private control debate is raging. ... The theory, however, brings into focus the social value of sustaining Internet infrastructure in an openly accessible manner, and strongly suggests that the benefits of open access (costs of restricted access) are significantly greater than the current debate reflects. ... Content providers use the infrastructure to provide a private service to the consumer (delivery of content for consumption) under conditions that render the output rivalrous and excludable. ... As discussed above, a user's willingness to pay for access to the infrastructure resource is limited to benefits that can be obtained by the user, which depends upon the nature of the outputs produced, the extent to which such outputs generate positive externalities, and the manner in which those externalities are distributed. ... Like a road system, a lake, and basic research, the Internet is socially valuable primarily because of the productive activity it facilitates downstream. ... This is a very similar dynamic as seen with public infrastructure; the basic difference is that the benefits of public good outputs often are appropriable to a more significant degree than the benefits of nonmarket good outputs."