Regional agreements and trade services - policy issues

Every major regional trade agreement now has a services dimension. Is trade in services so different that there is need to modify the conclusions on preferential agreements pertaining to goods reached so far? The authors first examine the implications of unilateral policy choices in a particular services market. They then explore the economics of international cooperation and identify the circumstances in which a country is more likely to benefit from cooperation in a regional rather than multilateral forum.Health Economics&Finance,Environmental Economics&Policies,Decentralization,Economic Theory&Research,Payment Systems&Infrastructure,Economic Theory&Research,Environmental Economics&Policies,Trade and Services,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade and Regional Integration

Public and private roles in road infrastructure: an exploration of market failure, public instruments and government failure

Starting with a 'greenfield' situation, we discuss reasons for market failure in road infrastructure provision. We show why it may not be optimal from a welfare perspective to leave road provision fully to the market and government intervention in this sector can improve welfare. Government intervention comes in different forms, such as financial intervention (taxation, subsidies), regulation (price, quality, environmental), and public provision of roads or road services. The analysis of the literature regarding government instruments allows us to establish a correspondence between different forms of market failure and instruments. Several case studies of particular road infrastructure projects are included to illustrate the use of government instruments.

Do market failures hamper the perspectives of broadband?

This report analyses the broadband market and asks whether a specific role of government is necessary. As broadband telecommunication is seen as a source of productivity gains, the European Union and other regions are encouraging the deployment of a secure broadband infrastructure. In the Netherlands, there is some concern whether the supply of broadband capacity will meet the strongly increasing demand. The main conclusions are that presently, given current broadband policy, no considerable market failures exist. Firms have adequate incentives to invest in broadband, partly induced by specific regulation of access to the local copper loop. Hence, there is no need for changes in current broadband policy. Market failures in terms of knowledge spillovers are taken care of by other policies. As the broadband markets are very dynamic, unforeseen developments may emerge such as the appearance of new dominant techniques and market players. The best strategy for the government, in particular the competition authority, is to continuously monitor these markets, making timely intervention easier when needed.

Information Technology as an Engine of Broad-Based Growth in India

In this paper, we survey some of the developments in India’s IT sector, and prospects for broad-based growth led by this sector. We examine the IT sector, discussing the role of software versus hardware, the growth pattern of the software industry and software exports, and the potential problems in IT labor supply to support future growth. We focus on a current bottleneck for the IT sector, namely the telecommunications infrastructure. Issues considered include the basic driver of technological convergence across voice and data communications, problems with current infrastructure, innovations that have the potential to dramatically alter the economics of access to telecoms, and the evolving structure of the telecoms industry. We also examine the policy environment more closely, arguing that government policy is better focused on removing labor market distortions and infrastructure constraints, rather than providing output or export subsidies to the software industry. We discuss the appropriateness of specific policy goals such as universal access, as well as issues of implementation of more general objectives of broader telecoms access. Finally, we map out the possibilities for broad-based IT-led growth, including increasing value-added, using better telecom links to capture more benefits domestically through offshore development for industrial country firms, greater spillovers to the local economy, broadening the IT industry with production of telecom access devices, improving the functioning of the economy through a more extensive and denser communications network, and improving governance.information technology, software, complementarities, telecommunications

Network Neutrality and the False Promise of Zero-Price Regulation

This Article examines zero-price regulation, the major distinguishing feature of many modern "network neutrality" proposals. A zero-price rule prohibits a broadband Internet access provider from charging an application or content provider (collectively, "content provider") to send information to consumers. The Article differentiates two access provider strategies thought to justify a zero-price rule. Exclusion is anticompetitive behavior that harms a content provider to favor its rival. Extraction is a toll imposed upon content providers to raise revenue. Neither strategy raises policy concerns that justify implementation of a broad zero-price rule. First, there is no economic exclusion argument that justifies the zero-price rule as a general matter, given existing legal protections against exclusion. A stronger but narrow argument for regulation exists in certain cases in which the output of social producers, such as Wikipedia, competes with ordinary market-produced content. Second, prohibiting direct extraction is undesirable and counterproductive, in part because it induces costly and unregulated indirect extraction. I conclude, therefore, that recent calls for broad-based zero-price regulation are mistaken.

Network Rules

Crawford compares the debate between the telcos and the online companies over broadband access regimes often called the network neutrality debate to the ongoing tussle between intellectual property maximalists and free culture advocates which are strikingly parallel sets of arguments. The maximalists claim that creativity comes from lone genuises (the romantic author) who must be given legal incentives to works but intellectual property scholars have carefully examined the incentives of their arguments and have pointed out that granting overly strong property rights to copyright holders might not be socially appropriate. Moreover, the network providers claim that they (the romantic builders) must be allowed by law to price-discriminate vis-a-vis content sources in order to be encouraged to build the network

Information Technology and India’s Economic Development

This paper discusses the possibilities for broad-based IT-led economic growth in India, including increasing value-added, using better telecom links to capture more benefits domestically through offshore development for developed country firms, greater spillovers to the local economy, broadening the IT industry with production of telecom access devices, improving the functioning of the economy through a more extensive and denser communications network, and improving governance. We also examine the policy environment, arguing that government policy is better focused on removing labor market distortions and infrastructure constraints, rather than providing output or export subsidies to the software industry.information technology, software, complementarities, telecommunications

Group formation: The interaction of increasing returns and preferences' diversity

The chapter is organized as follows. Section 2 focuses on competition in a simple economy under increasing returns to scale and heterogeneous consumers. The concept of sustainable oligopoly is discussed and analyzed. Section 3 studies in a more general and abstract set up competition among groups in the absence of spillovers. Whereas Section 3 develops some insights of Section 2, it can be read first. Finally Section 4 analyzes public decisions in a simple public good economy through the previous approach, and addresses the interaction between free mobility and free entry under negative externalities

Economic Growth, Innovation, Cultural Diversity. What Are We All Talking About? A Critical Survey of the State-of-the-art

This report constitutes the first deliverable of the project ENGIME – Economic Growth and Innovation in Multicultural Environments, financed by the European Commission – FP5 – Key Action: Improving socio-economic knowledge base. Contract HPSE-CT2001-50007Multiculturalism, Diversity, Economic Growth

Rational Regulatory Policy for the Digital Economy: Theory and EU Policy Options

Telecommunications is a key element of the ICT sector which has been shaped by strong innovation dynamics since the 1990s. Market dynamics in selected OECD telecommunications markets are analyzed. We present new ideas about efficient regulation, emphasizing the need to adopt a broader international perspective. Analytical innovations also include the discussion of an adequately-modified Hitch-Sweezy oligopoly model. Moreover, we suggest differentiated two-part tariffs as an ideal welfare-maximizing approach in both wholesale and end-product markets. From a theoretical point-of-view, the need to avoid regulatory uncertainty is also emphasized. Theoretical progress is contrasted with regulations in the EU and the US. The EU offers a broad range of different regulatory approaches where the link between framework regulation and national regulation is rather complex. The internationalization of telecommunications requires a broader cooperation among regulators in the OECD.Digital Economy, Regulatory Policy, European Union