Virtual Exit in the Global Information Economy

Abstract

Because the Internet provides an infrastructure where the marginal costs of distributing digitized information goods is close to zero, it will tend to drive market prices for information goods toward zero. At the same time, by providing “cheap exit” from localized information regulatory regimes, the Internet may promote competition among jurisdictions in producing information regulation. These markets for information products and for information regulation are linked, so that inefficiencies in one will alter the competitive trade - offs in the other. Both forms of competition may be characterized as races to externalize, in which the benefits of competition are potentially dissipated by jurisdictional spillovers. This will necessitate changes in the international regime for copyright and similar information regulation, which will increasingly tend toward a coordinated but potentially inefficient standard.