Table of Contents

Handbook on the Economics of the Internet

Handbook on the Economics of the Internet

Edited by Johannes M. Bauer and Michael Latzer

As the single most important general purpose technology of recent times, the Internet is transforming the organization, competitive structure and business models of the private, the public and non-profit sectors. In 27 original chapters, leading authors discuss theoretical and applied frameworks for the study of the economics of the Internet and its unique economics as a global information and communications infrastructure. They also examine the effects of the Internet on economic transactions (including social production, advertising, innovation, and intellectual property rights), the economics and management of Internet-based industries (including search, news, entertainment, culture, and virtual worlds), and the effects of the Internet on the economy at large.

Chapter 10: The economics of Internet standards

Stanley M. Besen and George Sadowsky

Subjects: economics and finance, industrial economics, innovation and technology, technology and ict


Internet standards permit users to have access to a wide variety of compatible software, to exchange documents, to combine the use of products made by different vendors, and to communicate directly. The Internet standardization process that eventually came to be carried out under the auspices of the Internet Engineering Task Force (IETF) has been remarkably successful both in achieving a high degree of acceptance by users and in adapting to significant growth in the number of Internet users and changes in the amount and nature of Internet traffic. After a brief discussion of the economics of standards, this chapter describes how this process came into existence and how and why it survived challenges both from an alternative standard that had been developed by the International Organization for Standardization (ISO) and from a number of proprietary technologies. Next, it addresses whether the technocratic nature of the IETF standards process can continue to remain largely immune from the increasing commercialization of the Internet. The chapter proceeds with a discussion of the recent controversy between the IETF and the International Telecommunication Union (ITU) over the standard for Multiprotocol Label Switching (MPLS). Finally, it explores a new challenge to the IETF standards process that has arisen because certain governments are seeking to have a larger role in the operation and governance of the Internet.

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