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Information Technology Policy and the Digital Divide

Lessons for Developing Countries

Edited by Mitsuhiro Kagami, Masatsugu Tsuji and Emanuele Giovannetti

The proliferation of new information technologies throughout the world has raised some important questions for policymakers as to how developing countries can benefit from their diffusion. This important volume compares the advantages and disadvantages of the IT revolution through detailed studies of a variety of developed and developing nations and regions: Argentina, Estonia, the EU, India, Japan, Korea, Mexico, South Africa, Thailand and the USA.
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Chapter 14: The Interconnection and Pricing of the Internet

Takanori Ida and Masashi Ueda


Takanori Ida and Masashi Ueda 1. INTRODUCTION One of the current problems which economics is facing is how to analyse the rapidly developing Internet. In the 1990s, the Internet became a driving force for the growth of the world economy, and the theory of ‘the New Economy’ was quite popular. However, as the new century began, the growth of IT industries slowed down, and an end to the IT bubble was whispered. At any rate, it is true that the spread of the Internet and the development of IT industries have significantly changed the structure of the world economy; for example, the 1997 US Department of Commerce report on ‘The Emerging Digital Economy’ discussed various aspects of the digital economy such as ecommerce and, more generally, the introduction of computers and related technology in the workplace. The purpose of this chapter is to consider to what extent we can analyse this rapidly evolving digital economy from the viewpoints of economics. Needless to say, it is beyond the ability of one person to analyse the Internet as a whole, but a number of studies have been conducted to this end over the last decade. Accordingly, this chapter will comprehensively survey studies made so far and, on the basis of these foundations, try to provide a model framework to analyse the industrial structure of the Internet. This chapter roughly consists of two parts. The first part goes from Section 2 to Section 4, where conventional studies are summarized, while the second part...

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