Depending on the infrastructure, different drivers will interact dynamically and
affect each other in unknown complex ways. Sometimes, the process may be
managed or strategically diverted, while in other cases, it might be impossible.
17.8.2 The Risk of Misdirected Prioritization, Optimization,
or Design
When private providers offer infrastructure services, they do so primarily for their
own interests, and their decisions may have two predictable biases in market
settings:
(1) tangible value bias and
(2) anti-uncertainty bias.
Tangible Value Bias Given that infrastructure resources can be designed for
optimal use in specific applications, there is no doubt that infrastructure suppliers
will give preference to applications that readily produce tangible benefits at the
detriment of applications that create positive externalities, notwithstanding that
society might be better off if the latter were given at least an equal priority.
This bias, of course, follows from the market system, where investors aim to
maximize their returns.
Anti-uncertainty Bias Given that infrastructure resources can be designed for
optimal use in specific applications, infrastructure suppliers will probably give preference to applications that currently exist or are expected to exist with a reasonable
degree of certainty over more uncertain or even unknown applications. As these
infrastructure suppliers function in a dynamic and uncertain environment, a significant
uncertainty resides on the evolution of the infrastructure in the future: how will
technology change and bring unforeseen uses, what will people prefer to buy against
the possible options, what complementary goods and services may be required? At
one time, a professional photographer used to take photographs, with his sturdy tripod
camera. The technology turned to more accessible compact cameras, still requiring
some talent, then to digital cameras, when many pictures could be taken, before
deleting the unnecessary ones. The smartphone has now turned everybody into a
photographer with their selfies. One sometimes wonders if the smartphone is used to
phone, at all! Uncertainty may be so powerful as a deterrent for market actors
preventing them from entering markets altogether. Kodak and IBM are notable
examples when they lost the digital camera and personal computer markets.
17.8.3 Uncertainty with Infrastructure Resources
In Chaps. 9, 10, 11, and 12, uncertainty was viewed negatively, with the hope that
this could be reduced in the future, either with progress or at a cost of further
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17 Infrastructure as Public or Private Goods
affect each other in unknown complex ways. Sometimes, the process may be
managed or strategically diverted, while in other cases, it might be impossible.
17.8.2 The Risk of Misdirected Prioritization, Optimization,
or Design
When private providers offer infrastructure services, they do so primarily for their
own interests, and their decisions may have two predictable biases in market
settings:
(1) tangible value bias and
(2) anti-uncertainty bias.
Tangible Value Bias Given that infrastructure resources can be designed for
optimal use in specific applications, there is no doubt that infrastructure suppliers
will give preference to applications that readily produce tangible benefits at the
detriment of applications that create positive externalities, notwithstanding that
society might be better off if the latter were given at least an equal priority.
This bias, of course, follows from the market system, where investors aim to
maximize their returns.
Anti-uncertainty Bias Given that infrastructure resources can be designed for
optimal use in specific applications, infrastructure suppliers will probably give preference to applications that currently exist or are expected to exist with a reasonable
degree of certainty over more uncertain or even unknown applications. As these
infrastructure suppliers function in a dynamic and uncertain environment, a significant
uncertainty resides on the evolution of the infrastructure in the future: how will
technology change and bring unforeseen uses, what will people prefer to buy against
the possible options, what complementary goods and services may be required? At
one time, a professional photographer used to take photographs, with his sturdy tripod
camera. The technology turned to more accessible compact cameras, still requiring
some talent, then to digital cameras, when many pictures could be taken, before
deleting the unnecessary ones. The smartphone has now turned everybody into a
photographer with their selfies. One sometimes wonders if the smartphone is used to
phone, at all! Uncertainty may be so powerful as a deterrent for market actors
preventing them from entering markets altogether. Kodak and IBM are notable
examples when they lost the digital camera and personal computer markets.
17.8.3 Uncertainty with Infrastructure Resources
In Chaps. 9, 10, 11, and 12, uncertainty was viewed negatively, with the hope that
this could be reduced in the future, either with progress or at a cost of further
496
17 Infrastructure as Public or Private Goods