A feature of the activities powered by the Internet is due to the multifaceted externalities they produce.
It is the Internet that is at the heart of the provision of multiple services to citizens, as it is one of the pillars of the information infrastructure. It is a medium for the dissemination of bulk or merit goods.
For example, government agencies, educational and research institutions, non-profit organizations, etc. provided by.
It is also important to mention all the services provided to citizens and the benefit created by the generalized connection between network users.
Consequently, and as other infrastructure networks provide, the services offered by the Internet are the source of multiple externalities between users. It is also a source of externalities that may be ineffective to be managed by a market mechanism.
Paying to take advantage of them encourages producers to invest enough to produce optimally on the social plane.
In the case of the Internet, these problems are reinforced by the large number of externalities involved, given the diversity of dimensions of economic and social life affected. In addition, externalities between knowledge activities also affect market activities.
A network is a system that attracts consumers to the Internet or facilitates the posting or use of free information, as the search engine does. It is also a particularly effective environment for conducting business operations, thanks to the provision of free and non-commercial services.
Beyond these interdependencies between content, there are strong interdependencies between network services and content. The accessibility and quality of the latter are closely tied to the price and quality of the former.
As with managing scarcity constraints, there are two extreme solutions for managing all these externalities.
Provided that a property rights system is perfectly defined and transaction costs are zero, an externality problem can be solved with a market transactions system.
If these conditions are not met, non-market resource allocation mechanisms should be designed to attempt to correct market failures.
As they create the environment for information exchange, information and communication technologies (ICT) open up the possibility to facilitate the development of a market information exchange system.
Any information encoded in a computer system can be made possible by technical means or at low traceability cost. It can indeed be correlated with usage rules made enforceable by a posteriori control.
In other words, it can also limit usage rights on information resources. It can be defined as a system of property rights that tends to be complete as it can make them viable at minimal cost.
Also, due to the low costs of transmitting and reproducing digitized information, generalized code and encryption are used.
Because these transactions are secured, transaction costs on these resources are reduced with ICT.
In the first analysis, ICT seems to allow its hypotheses to come true, but it seems to reduce the need for non-market regulation. Two kinds of arguments lead to nuances in this vision.
First, the definition of a property rights system is a prerequisite for a market and easy allocation of resources and is itself based on non-market regulation.
The definition of a consistent system of use rights on resources can neither be done in a decentralized manner nor can it be made after the use of these resources. However, information sources affected by the Internet are not subject to a precise definition of property rights.
First, there is content created by individuals or organizations, not all of which are eligible for recognized legal protection. It applies from mathematical theorems to knowledge of the comparative values of merchants in a catchment area.
Then there is personal information that ranges from identifiers assigned to individuals to information describing their characteristics (preference, health, opinion, etc.).
Finally, it concerns the information necessary for the operation of networks, where the usage rules are very lacking. (IP addresses, phone numbers, email addresses, etc.)
In all these cases, the property rights system is incomplete unless there are strict rules regarding the rights to use this information in more than one possible situation, in particular.
Any decentralized solution results from non-market regulation, as they affect the previous distribution of wealth. It requires pre-determination of rules that are likely to have strong repercussions on probabilities for information markets.
A medium cost, then, does not mean zero cost. While computing costs are low and declining, they are not zero. Also, information processing costs are often mistakenly equated with data processing costs.
The human mind remains essential to performing complex information processing operations involving various types of cognitive processes and is influenced by ICT.
The costs of a complete system of property rights over information would likely be prohibitive. Because all information and all possible combinations of information need to be defined.