ABSTRACT
As we have noted in Chapter 8, even in a free-market economy, there is theorybased support for government policy intervention in the IT fields. Individual profit-based initiatives may not allocate sufficient effort and investment to hightech development. With regard to IT and e-business, public good considerations are especially important. New technology has spillover effects; innovations introduced by one individual may also be useful to many more. Networks provide linkages and communications, choices that are not available to separate operators. Externalities and network effects imply that the sum of benefits is bigger than would be the total value of the individual parts. In other words, technical knowledge, that is so central to applications of IT, benefits the society beyond the gains to the initial investor.
