Chapter 11. Innovative Conduct in Computing and Internet Markets

How has innovative and competitive behavior in computing and Internet markets evolved over the past half-century? In the first section of this review, I discuss these questions in light of six topics: the limited role for technology push; the diffusion of general-purpose technologies; the organization of proprietary platforms; the presence of asymmetric innovation incentives; the importance of market-oriented learning; and the localization of economic activity. Despite dramatic changes in outcomes, in the predominant product markets, and in the identities of leading sellers, the conditions of market structure shape innovative conduct in firms from one year to the next and, to a large extent, from one decade to the next, in many of the same economic terms. In the second section, I closely examine the US commercial Internet experience in the 1990s. While the peculiar events that led to the invention of the commercial Internet explain some of the salient and unique features of the commercial experience, much innovative activity resembles conduct seen for many decades in computing markets. This analysis highlights three additional topics: the division of technical leadership; the rise of open organizational forms for coordinating platforms; and the extraordinary breadth of activity touched by the Internet. These three additional factors account for many of the novel aspects of innovative conduct in the Internet market.