Invisible hands versus invisible advisors : coordination mechanisms in economic networks

60 Pages·1993·3.9 MB·English

by  Greenstein, Shane M

330 STX
B3S5
Faculty Working Paper 93-0111 l??3:lil COPY 2
Political Economy Series #61
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Invisible Hands Versus Invisible Advisors:
Coordination Mechanisms Economic Networks
in
Shane M. Greenstein
Department ofEconomics
University ofIllinois
Bureau of Economic and Business Research
College of Commerce and Business Administration
University of Illinois at Urbana-Champaign

1
BEBR
FACULTY WORKING PAPER NO. 93-01
1
Papers in the Political Economy of Institutions Series No. 61
College of Commerce and Business Administration
University of Illinois at Urbana-Champaign
February 1993
Invisible Hands Versus Invisible Advisors:
Coordination Mechanisms in Economic Networks
Shane M. Greenstein
Department of Economics
Digitized by the Internet Archive
in 2012 with funding from
University of Illinois Urbana-Champaign
http://www.archive.org/details/invisiblehandsve93111gree
Invisible Hands Versus Invisible Advisors:
Coordination Mechanisms in Economic Networks
By Shane M. Greenstein
University of Illinois, Urbana-Champaign
Original: April 1992
This revision: February, 1993
Conference on "Private Networks and Public Objectives
11
CITI, Columbia University
I would like to acknowledge my intellectual debt to Paul
David, who originally inspired my interest in this area and
shaped many of my perceptions of the problems. I also wish to
thank Tim Bresnahan, Eli Noam, Ed Steinmueller, and Margaret
Simpson for useful conversations, and seminar participants at
CITI in Columbia University, GTE Laboratories, the University of
Illinois, Northwestern University, and the Western Economics
Association for useful comments.

Abstract
The article discusses the efficacy of relying on market
mechanisms to guide growth of economic networks, with special
reference to information technology markets. Many insights into
the efficacy of relying on market mechanisms are not consistent
with one another, nor do they all transparently synthesize into a
single policy vision. Thus, extending this literature
appropriately should have some value. A secondary purpose of this
essay is to identify important issues that remain unaddressed and
indicate directions towards potential answers.