Equity and efficiency in the electronic distribution of information

Abstract

One of the issues in the electronic distribution of information, such as the information highway, is how to distribute the extra costs users impose. While the idea that efficiency requires that users pay for these additional costs has long been known in economics, it is still a contentious idea because of the fear that bearing these costs will prevent some users from using the system. In this article, I argue that there are more serious and long-term threats to equity than the payment of these marginal costs. Specifically, I argue that access is already more seriously restricted because users need to have access to a computer and are mostly affiliated with universities and research institutes. Further, the information presently consumed by those without access can be of lower quality than those with access. In a dynamic context, those who consume this type of information and are without access are likely to continue to consume this type of information if given access. This makes it more difficult for them to raise their productivity and to signal such an increase. Finally, they may pass this pattern of consumption and productivity to their children, trapping the next generation in the same type of low productivity. A failure of policy makers to focus on access and types of information may therefore cause a loss of both efficiency and equity.