Abstract: The Internet acts as a virtual and virtuous public good. It incorporates the activities of all who wish to use it. It allows these users to interact without any rivalry in their usage. And it serves the greater good of the community in which it exists, easing information flows and creating layers of positive externalities. But does this world really exist? Can it deliver the lofty ideals that its adherents predict? In 1998, it is not quite clear. Yes, the potential of the Internet is obvious. But its capacity to function as a public good is not. Particularly in the developing world, the promise of a networked society may be more hopeful than real. Uncertainty results from the growing trend toward “privatization” of the Internet. In theory, the Internet is nonrival and nonexcludable. But congestion problems are appearing, and servers are beginning to charge for access. Spar also discusses the Internet's positive and negative externalities. On the positive side, there have been gains in health, education and commerce – and hence growth. On the negative side, it is easier to transmit objectionable material. Internet regulations intended to tackle negative externalities will fail unless they are undertaken in concert among all nations – and even then they will be difficult to implement. The most important item on the policy agenda, however, is to ensure that developing countries obtain adequate physical infrastructure to reap the benefits of the Internet, and that those who can benefit most are not deterred by high prices from using the services.

Keywords: access, congestion, connectivity, global public goods, internet, privatization,