Nurturing the Accumulation of Innovations: Lessons from the Internet
Shane M. Greenstein · National Bureau of Economic Research · 2010
The innovations that became the foundation for the Internet originate from two eras that illustrate two distinct models for accumulating innovations over the long haul.The pre-commercial era illustrates the operation of several useful non-market institutional arrangements.It also illustrates a potential drawback to government sponsorship -in this instance, truncation of exploratory activity.The commercial era illustrates a rather different set of lessons.It highlights the extraordinary power of market-oriented and widely distributed investment and adoption, which illustrates the power of market experimentation to foster innovative activity.It also illustrates a few of the conditions necessary to unleash value creation from such accumulated lessons, such as standards development and competition, and nurturing legal and regulatory policies.