• Economist.com, Tuesday, June 2, 2009 11 AM

In a book that's sure to be controversial among free-market advocates, two academics argue that government regulation has led to the success of the IT industry in the U.S. As examples, Peter Cowhey of the University of California, San Diego (who recently joined the Obama administration) and Jonathan Aronson of the University of Southern California, point to the feds breaking up AT&T and forcing IBM to separate its hardware and software businesses.

Fragmenting these industries helps common standards to emerge, according to the book, Transforming Global Information and Communication Markets. This, in turn, allows businesses to become "modularized" so that, for instance, "Microsoft's operating system and Novell's applications run on IBM's hardware while an AT&T Internet connection can be used to access Google's search engine."

The story also points to a new paper by Robert Dujarric of Temple University, Japan, and Andrei Hagiu of Harvard Business School that delves into why Japanese companies perform poorly in areas in which collaboration with a broader range of organizations would be beneficial for all.

Read the whole story at Economist.com »