Vinod's Blog
Random musings from a libertarian, tech geek...
Wednesday, December 18, 2002 - 09:41 AM Permanent link for Edge vs. Central Power
Edge vs. Central Power

Arnold Kling writes in TCS about how the Internet (and broad types of tech like it) facilitate Edge Power

The Internet lowers the cost of the tools of communication and creativity, making them affordable to individuals and small businesses. This phenomenon might be called Edge Power, because it increases power around the "edges" of the network, in contrast with broadcast media, where power is centralized.

Kling's article makes too broad of a statement.    He overlooks the fact that while reduction in transport/communication costs decentralizes some things it also centralizes / aggregates others.

He comes close here:

An example of a company that treats Edge Power as a feature is Amazon. Amazon encourages consumers to participate by providing reviews, ratings, and recommendation lists.

Amazon has a large, well-established affiliate-marketing program. Anyone can set up a web site that offers to sell books through Amazon. The affiliate receives a share of revenues. Affiliates can even install one-click ordering from Amazon.

The result of being the switching point amongst a large network of affiliates, of course, is that now Amazon accrues network advantages to itself and becomes a center.

Now-classic Internet plays exploiting these network advantages also include Yahoo (vs. the local Yellow Pages of the old world), Google (vs. directories of periodicals), and Ebay (vs. the local classified ads).

Historically, for ex., transportation efficiencies brought about by the rise of the railroads in the late 1800s/early 1900s actually centralized industries such as refining and metal fabrication as much as it decentralized population centers.

One of the few semi-intellectual arguments against globalization also treads along this line -- that as transport/communications networks improve, they disaggregate local centers of power and suck 'em up into international centers  (e.g. India's shoe industry being swallowed by China).   Thus leaving the "periphery" economy "imperialized" by the dominant one.  


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