`THE ROLE OF GOVERNMENT IN A DIGITAL AGE JOSEPH E. STIGLITZ PETER R. ORSZAG JONATHAN M. ORSZAG COMMISSIONED BY THE COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION OCTOBER 2000
`
`Petitioner Exhibit 1025 p.1
`
`

`

` 1About This Study This study was commissioned by the Computer & Communications Industry Association (CCIA) as an independent analysis of the appropriate role for government in an information economy. The views and opinions expressed in this study are solely those of the authors and do not necessarily reflect the views and opinions of CCIA. The authors of the study are: Joseph Stiglitz (stiglitzj@sbgo.com) is Professor of Economics at Stanford University, Senior Fellow at the Brookings Institution, and Senior Director and Chairman of the Advisory Committee at Sebago Associates, Inc., an economic policy consulting firm. Previously, Dr. Stiglitz served as the World Bank's Chief Economist and Senior Vice President for Development Economics and, before that, as the Chairman of the President's Council of Economic Advisers. Peter Orszag (orszagp@sbgo.com) is President of Sebago Associates, Inc., and a lecturer in economics at the University of California, Berkeley. Prior to founding Sebago Associates, Dr. Orszag served as Special Assistant to the President for Economic Policy at the White House. Jonathan Orszag (jorszag@sbgo.com) is the Managing Director of Sebago Associates, Inc. Prior to joining Sebago Associates, Mr. Orszag served as the Assistant to the Secretary of Commerce and Director of the Office of Policy and Strategic Planning. Additional biographical information about the authors is available on page 120. The authors thank numerous commentators (including academics, government officials, information policy specialists, and industry analysts) for extremely valuable insights and assistance on this report. The authors also thank John Ifcher, Aaron Klein, Diane Whitmore, and Pai-Ling Yin for excellent research assistance.
`
`Petitioner Exhibit 1025 p.2
`
`

`

` 2Table of Contents Page About This Study 1 Executive Summary 4 Introduction 6 Part I: Information Technology and Government Policy 11 I. The Impact of Information Technology on the Economy, Business, and Government 12 Impact of information technology on the economy 12 Impact of information technology on business 16 Impact of information technology on government 25 II. The Theory of the Government’s Role in a Digital Age 30 Public provision versus public financing 36 The role of government in a “bricks and mortar” economy 38 The role of government in a digital economy 39 III. Current Government Policy 47 Part II: Principles for Government Action 49 Principles for Government Provision of Goods and Services in a Digital Economy 50 Green Light Principles for Governmental Activity 53 Principle 1: Providing public data and information is a proper governmental role 53 Principle 2: Improving the efficiency with which governmental services are provided is a proper governmental role 54 Principle 3: The support of basic research is a proper governmental role 56 Yellow Light Principles for Governmental Activity 57 Principle 4: The government should exercise caution in adding specialized value to public data and information 57 Principle 5: The government should only provide private goods, even if private-sector firms are not providing them, under limited circumstances 61 Principle 6: The government should only provide a service on-line if private provision with regulation or appropriate taxation would not be more efficient 62
`
`Petitioner Exhibit 1025 p.3
`
`

`

` 3Principle 7: The government should ensure that mechanisms exist to protect privacy, security, and consumer protection on-line 64 Principle 8: The government should promote network externalities only with great deliberation and care 67 Principle 9: The government should be allowed to maintain proprietary information or exercise rights under patents and/or copyrights only under special conditions (including national security) 69 Red Light Principles for Governmental Activity 71 Principle 10: The government should exercise substantial caution in entering markets in which private-sector firms are active 71 Principle 11: The government (including governmental corporations) should generally not aim to maximize net revenues or take actions that would reduce competition 72 Principle 12: The government should only be allowed to provide goods or services for which appropriate privacy and conflict-of-interest protections have been erected 74 A Decision Tree for Policy-Makers 75 Part III: Case Studies 78 Case Study: The Department of Labor’s On-Line Job Market Information 79 Case Study: United States Postal Service eBillPay 86 Case Study: Lexis-Nexis 98 Case Study: On-Line Tax Preparation Software 104 Case Study: Fee-Based Search Engine from the National Technical Information Service 112 Conclusions 118 Biographical Information 120 Appendix A: Circular A-76 121 Appendix B: Memorandum for the Heads of Executive Departments and Agencies on Electronic Government 130 Appendix C: Circular A-130 135
`
`Petitioner Exhibit 1025 p.4
`
`

`

`•
`
`•
`
`•
`
`Existing rules for evaluating governmental activities need to be updated to reflect the ongoing shift toward a digital economy. Industrial developments at the beginning of the 20th century required major rethinking of the role of government, as evidenced by the creation of the Federal Reserve System, the Sherman and Clayton Anti-Trust Acts, and the Constitutional amendment allowing a Federal income tax. A substantial review is also warranted now. •
`As President Clinton has emphasized, for the government, “knowing when to act and – at least as important – when not to act, will be crucial to the development of electronic commerce.” The purpose of this study is to examine when the government should act and when it should not act in a digital economy. In particular, our focus is what services the government should and should not be providing on-line.
`As the report discusses, the theoretical underpinnings behind private versus public production shift as the economy moves toward a digital one. On one hand, the public good nature of production in a digital economy, along with the presence of network externalities, may suggest a larger public role than in a bricks-and-mortar economy. On the other hand, an information-based economy may also improve the quality and reduce the cost of obtaining information, which by itself makes private markets work better than before. Furthermore, government failure may be even more pronounced in the context of rapidly moving information-laden markets than in traditional bricks-and-mortar markets.
`The lack of clear theoretical guidance regarding the separation between government and business in a digital economy makes decision-making rules all the more important. OMB Circular A-76 and other existing norms for government provision of goods and services need to be updated for the digital age. We therefore devise a set of twelve principles for government action in a digital economy (see box below), along with a decision tree for policy-makers (see page 75) to use when evaluating new government activities. The principles are divided into three categories: “green light” activities that raise few concerns; “yellow light” activities that raise increasing levels of concern; and “red light” activities that raise significant concern.
`The report applies these principles to five case studies, including the Department of Labor’s on-line job market information system, the United States Postal Service eBillPay program, private-sector dissemination of legal information, on-line tax preparation software, and a fee-based search engine from the National Technical Information Service. In some cases (e.g., the America’s Job Bank), the government seems to have struck the appropriate balance among conflicting pressures. In other cases (e.g., eBillPay), the government seems to have overstepped the boundaries that should apply to public provision of goods and services.
`
` 4Executive Summary
`
`•
`
`Petitioner Exhibit 1025 p.5
`
`

`

` 5Principles for On-Line and Informational Government Activity "Green Light" for On-Line and Informational Government Activity Principle 1: Providing public data and information is a proper governmental role Principle 2: Improving the efficiency with which governmental services are provided is a proper governmental role Principle 3: The support of basic research is a proper governmental role "Yellow Light" for On-Line and Informational Government Activity Principle 4: The government should exercise caution in adding specialized value to public data and information Principle 5: The government should only provide private goods, even if private-sector firms are not providing them, under limited circumstances Principle 6: The government should only provide a service on-line if private provision with regulation or appropriate taxation would not be more efficient Principle 7: The government should ensure that mechanisms exist to protect privacy, security, and consumer protection on-line Principle 8: The government should promote network externalities only with great deliberation and care Principle 9: The government should be allowed to maintain proprietary information or exercise rights under patents and/or copyrights only under special conditions (including national security) "Red Light" for On-Line and Informational Government Activity Principle 10: The government should exercise substantial caution in entering markets in which private-sector firms are active Principle 11: The government (including government corporations) should generally not aim to maximize net revenues or take actions that would reduce competition Principle 12: The government should only be allowed to provide goods or services for which appropriate privacy and conflict-of-interest protections have been erected •
`
`The appropriate role of government in the economy is not a static concept: It must evolve as the economy and technology do. As economic activity shifts toward information-intensive goods and services, public policy is being presented with a series of challenges, from protecting privacy to the appropriate taxation of on-line sales and jurisdictional concerns. •
`
`Policy-makers, analysts, and others may disagree with some of the principles and conclusions reached in this analysis. But it will have served its purpose if it helps to spur debate over these issues, regardless of whether all its conclusions are accepted.
`
`Petitioner Exhibit 1025 p.6
`
`

`

` 6THE ROLE OF GOVERNMENT IN A DIGITAL AGE Joseph E. Stiglitz, Peter R. Orszag, and Jonathan M. Orszag October 2000 Introduction Innovations in information technology (IT) have spurred significant changes in the U.S. economy over the past two decades. Firms have invested heavily in computers and peripheral equipment, along with software, advanced telecommunications systems, and other information technology. These investments have facilitated significant improvements in inventory systems, reduced shipping costs, and allowed more effective responses to changes in consumer preferences – thus improving the efficiency of the production system. At the same time, the American public is increasingly turning to computers and the Internet for a variety of purposes, from receiving an education to investing in the stock market or buying a car. These developments are potentially momentous for the economy and for our broader society. As Alan Greenspan recently stated, “When historians look back at the latter half of the 1990s a decade or two hence, I suspect that they will conclude we are now living through a pivotal period in American economic history.”1 To be sure, technological improvements have been ongoing over an extended period of time. The invention of electricity and the internal combustion engine 1 Alan Greenspan, “The revolution in information technology,” speech delivered to the Boston College Conference on the New Economy, March 6, 2000.
`
`Petitioner Exhibit 1025 p.7
`
`

`

` 7in the 1870s, for example, represented dramatic economic and social innovations.2 But the changes engendered by advances in information technology also appear to represent a relatively rare historical development. Professor Paul David of Stanford University, for example, has compared the spread of the computer at the end of the 20th century to the spread of electricity at the end of the 19th century.3 The “pivotal period” that Alan Greenspan suspects we are currently experiencing has important implications not only for private-sector firms and American consumers, but also for the government. Just as the industrial developments at the end of the 19th century required major re-thinking of the role of government – as evidenced by the creation of the Federal Reserve System (1913), the Sherman (1890) and Clayton (1914) Anti-Trust Acts, and the Constitutional amendment allowing a Federal income tax (1913) – a substantial review is warranted now. Extant rules and norms for delineating what government should and should not do seem inadequate to the task, since they were not developed for the emerging electronic world. As Chairman Greenspan noted in a somewhat different context, today’s economy is “one that none of us has even seen before, and indeed it may be unprecedented in our history… The type of policy we have to devise has to reflect the nature of how the new economy is working. A 2 Some analysts argue that the inventions at the end of the 19th century were much more significant than the current information technology innovations. See, for example, Robert J. Gordon, “Does the ‘New Economy’ Measure up to the Great Innovations of the Past?” Journal of Economic Perspectives, forthcoming. We do not find it necessary to compare the significance of current innovations to those of the past, which is the focus of Gordon’s analysis; the key point for our purposes is that innovations in information technology raise new public policy concerns. 3 See, for example, Paul David, “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” American Economic Review, May 1990, pages 355-361, and “Computer and Dynamo: The Modern Productivity Paradox in a Not-Too-Distant Mirror,” Center for Economic Policy Research, Stanford University, Reprint Number 5, July 1995. Bob Davis and David Wessel of the Wall Street Journal extend the argument to include, for example, comparisons between the spread of high school education at the beginning of the 20th century and the spread of college education at the beginning of the 21st century. See Bob Davis and David Wessel, Prosperity: The Coming 20-Year Boom and What It Means to You (Random House: New York, 1998).
`
`Petitioner Exhibit 1025 p.8
`
`

`

` 8number of the old tools which we relied upon don't have relevance to this.”4 As the Wall Street Journal recently added, “The country hasn’t been in such a state since the early part of last century, when a set of decisions shaped the relationship between the industrialized economy and the government for decades to come.”5 The questions facing policy-makers in considering what the government should and should not produce in a digital age are particularly difficult, since the line between internal efficiency improvements and the provision of goods and services to the public often becomes blurred. For example, if travel services are re-engineered and enhanced for government employees, why not increase economies of scale, and thereby reduce costs further for the government, by offering the same services to general citizens? Similarly, if government network infrastructure expands, and bulk communications service purchasing enables low prices, why not utilize unused capacity and serve as an Internet Service Provider (ISP) to the public, or resell communications services to the public? In short, the spread of the Internet and other information technologies raises important new questions about the appropriate role for government in producing goods and services, and in regulating private-sector activities. As President Clinton emphasized in 1997, “Governments can have a profound effect on the growth of electronic commerce. By their actions, they can facilitate electronic trade or inhibit it. Knowing when to act and -- at least as important -- when 4 Testimony before the Senate Banking Committee, as quoted in Richard Stevenson, "Pondering Greenspan's Next Move," The New York Times, Tuesday, March 21, 2000, page C1. 5 Bob Davis and Gerald Seib, “Policing a Wildfire: Technology Will Test a Washington Culture Born in Industrial Age,” Wall Street Journal, May 1, 2000, page A1.
`
`Petitioner Exhibit 1025 p.9
`
`

`

`•
`
`•
`
`•
`
`Highlighting the need for re-thinking the role of government by policy-makers, the press, the business community, and academics;
`
`Providing policy-makers with a policy framework for evaluating whether new governmental activities would or would not be socially beneficial; and
`
` 9not to act, will be crucial to the development of electronic commerce.”6 The purpose of this study is to examine when the government should act and when it should not. In particular, our principal focus is what services the government should and should not be providing on-line. The study thus serves several purposes, including:
`Using that framework to examine several recent case studies of existing or proposed public-sector activities. The study is organized as follows: The first part provides important background to our exploration of the appropriate role for government in a digital economy. It examines the impact of information technology on the economy, business practices, and the government; the theory of the government’s role in the economy; and current government policy regarding commercial activities. The second part delineates 12 specific principles for governmental activities in a digital economy, including three “green light” principles regarding governmental activities that should elicit little concern, six “yellow light” principles regarding activities that should be undertaken only with significant caution, and three “red light” principles regarding activities that should generally not be undertaken by the government. The third part examines several case 6 Memorandum from President Clinton to the Heads of Executive Departments and Agencies, “Electronic Commerce,” July 1, 1997, available at http://www.whitehouse.gov.
`
`Petitioner Exhibit 1025 p.10
`
`

`

`10studies against which these principles can be judged. A short final section offers conclusions and policy recommendations.
`
`Petitioner Exhibit 1025 p.11
`
`
`

`

`11 PART I: INFORMATION TECHNOLOGY AND GOVERNMENT POLICY
`
`Petitioner Exhibit 1025 p.12
`
`
`

`

`12I. The Impact of Information Technology on the Economy, Business, and Government Information technology production and use are growing rapidly. By July 2000, for example, nearly 360 million people worldwide were connected to the Internet, up from 185 million people a year earlier.7 In 1990, information technology industries (including hardware, software, and communications) accounted for 5.8 percent of U.S. gross domestic income.8 By 1999, those industries accounted for an estimated 8.2 percent of gross domestic income. The purpose of this section is to explore how this rapid growth in information technology has affected the economy, businesses, and the government. Impact of information technology on the economy In the long run, productivity growth is the key to improving living standards. The most important contribution that investments in information technology can make to economic performance is thus to improve productivity. Throughout the 1980s and 1990s, firms made substantial investments in information technology. In 1996, for example, telecommunications firms invested an average of $29,236 in information technology per worker. Non-depository financial institutions invested an average of $18,129, and radio and television firms invested an average of $17,512.9 7 Nua Internet Surveys, available at http://www.nua.ie/surveys/how_many_online/world.html 8 U.S. Department of Commerce, Statistical Abstract of the United States 1999, Table 917, page 579. 9 Council of Economic Advisers, Economic Report of the President 2000 (Government Printing Office: Washington, 2000), Table 3-2.
`
`Petitioner Exhibit 1025 p.13
`
`
`

`

`13Until the mid-1990s, however, the dramatic investments that firms were making in IT did not appear to translate into improvements in productivity. Indeed, Robert Solow, a Nobel-prize-winning economist at the Massachusetts Institute of Technology, famously quipped that, “We see computers everywhere but in the productivity statistics.”10 By the latter half of the 1990s, on the other hand, the massive IT investments did appear to be making a substantial contribution to improved economic performance. Productivity growth increased from an average of 1.6 percent per year between 1991 and 1995 to 2.7 percent per year between 1996 and 1999. As Chairman Greenspan noted, “until the mid-1990s, the billions of dollars that businesses had poured into information technology seemed to leave little imprint on the overall economy…The full value of computing power could be realized only after ways had been devised to link computers into large-scale networks. As we all know, that day has arrived.”11 One recent study concluded that investments in IT and efficiency improvements in the production of computers explain more than two-thirds of the increase in productivity growth between the early 1990s and the late 1990s.12 In particular, productivity growth increased by 1.1 percentage points per year between 1991-1995 and 1996-1999 (from 1.6 percent per year to 2.7 percent per year). Of that 1.1 percentage point increase, 0.5 percentage points can be explained by investments in information technology and another 0.2 percentage points can be explained by 10 Robert M. Solow, “We’d Better Watch Out,” New York Times Book Review, July 12, 1987, page 36. 11 Alan Greenspan, “The revolution in information technology,” speech delivered to the Boston College Conference on the New Economy, March 6, 2000. 12 Stephen Oliner and Daniel Sichel, “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” Federal Reserve Board of Governors, Finance and Economics Discussion Series, 2000-20, March 2000.
`
`Petitioner Exhibit 1025 p.14
`
`
`

`

`14improved efficiency in computer and semi-conductor production. Thus, 0.7 percentage points of the 1.1 percentage point total increase was directly connected to information technologies.13 The disproportionate role played by information technology in bolstering aggregate productivity growth reflects, at least in part, phenomenal efficiency improvements within the sector itself. Between 1990 and 1997, for example, growth in output per worker in industries producing information technology goods and services averaged 10.4 percent, relative to 1.4 percent for the private non-farm economy as a whole.14 One recent study documents productivity growth of 42 percent per year between 1995 and 1999 in the production of computers.15 The new information technologies may have induced not only higher productivity growth, but also more stable growth. For example, one of the key uses of information technologies has been in the area of logistics systems. A more efficient transportation system reduces the time required in sourcing, producing, and distributing goods, as well as the error rates in the supply chain.16 It also reduces the inventories that firms must hold. The reduction in inventory holdings relative to sales over the past thirty years has been dramatic. The average lead-time for ordering materials and supplies in advance of production has declined from 72 days between January 1961 and 13 Stephen Oliner and Daniel Sichel, “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” op. cit., Table 5. 14 U.S. Department of Commerce, The Emerging Digital Economy: II, Table 3.2, available at http://www.ecommerce.gov. 15 Robert Gordon, "Has the 'New Economy' Rendered the Productivity Slowdown Obsolete?" Northwestern University, June 14, 1999. It is worth noting, however, that Professor Gordon's paper suggests that there has been no cyclically-adjusted productivity growth increase in non-durable sectors that use, as opposed to produce, computers. Indeed, Gordon is skeptical of the “new economy” hypothesis precisely for this reason. As he argues, “Outside of durable manufacturing, the New Economy has been remarkably unfruitful as a creator of productivity growth.” Gordon, “Does the ‘New Economy’ Measure up to the Great Inventions of the Past?” op. cit., page 46. 16 U.S. Department of Transportation, U.S. Freight: Economy in Motion 1998, page 4.
`
`Petitioner Exhibit 1025 p.15
`
`
`

`

`•
`
`•
`
`15December 1983 to less than 50 in 1997.17 Total manufacturing and trade inventories have fallen from roughly 1.6 times monthly sales in the 1960s and 1970s to 1.3 times currently.18 These lower inventories have a variety of economic benefits, including:
`
`Reduced inventory carrying costs. The reduction in the inventory-sales ratio over the past three decades implies a substantial decline in the inventories firms must hold to meet current sales. Given recent levels of total manufacturing and trade sales, for example, inventories are roughly $260 billion lower than they would have been without the improved inventory management.19 The associated reduction in carrying costs allows more capital to flow into productive equipment and machinery.
`Reduced business cycle fluctuations. Historically, fluctuations in inventory investment have contributed significantly to business cycle fluctuations. One study concludes that more efficient inventory investment has played a critical role in reducing the variability of output growth over the past 15 years.20 Alan Greenspan has added that "the dramatic changes in information technology that have enabled businesses to embrace the 17 National Association of Purchasing Managers, series on average lead time for ordering production materials. 18 Council of Economic Advisers, Economic Report of the President 2000 (Government Printing Office: Washington, 2000), Table B-55. 19 In March 2000, for example, total manufacturing and trade inventories were $1,166 billion. If the inventory-sales ratio were 1.6 (roughly its level at the end of the 1960s), total inventories would instead have been $1,426 billion, or roughly $260 billion higher than their current level. 20 Margaret M. McConnell, Patricia C. Mosser, and Gabriel Perez Quiros, "A Decomposition of the Increased Stability of GDP Growth," Federal Reserve Bank of New York, Current Issues in Economics and Finance, September 1999.
`
`Petitioner Exhibit 1025 p.16
`
`
`

`

`16techniques of just-in-time inventory management appear to have reduced that part of the business cycle that is attributable to inventory fluctuations...."21 In addition, investments in information technology may produce benefits that are not measured in the traditional statistics on productivity or GDP. For example, if new information technologies make it more convenient to purchase a book (e.g., by facilitating access to an impressive array of book titles on-line at any hour of the day), the added convenience to consumers of purchasing any given book is not directly captured in the productivity statistics. As Professor Alan Blinder of Princeton University recently wrote, “Retailing over the Internet may offer many benefits to consumers, such as easier comparison shopping, removal of travel costs, and 24-hour availability. But such gains will never be counted in GDP, and so will never appear in the productivity statistics.”22 Impact of information technology on business The aggregate economic benefits of information technology – reflected in higher productivity growth and a reduction in the degree of economic fluctuation – arise from the improvements that such technology facilitates in the production of goods and services in sectors ranging from the media to banking, and from passenger travel to automobile manufacturing. This section briefly explores some of the ways in which information technology is changing the way businesses interact with consumers and the way businesses interact with other businesses. 21 Alan Greenspan, "New Challenges for Monetary Policy," Speech, Jackson Hole, Wyoming, August 27, 1999. 22 Alan Blinder, “The Internet and the New Economy,” Brookings Institution Policy Brief #60, June 2000, page 5.
`
`Petitioner Exhibit 1025 p.17
`
`
`

`

`•
`
`17Business-to-consumer e-commerce E-commerce is fundamentally changing the relationship between businesses and consumers, by increasing convenience and choice while saving time and money. Private-sector forecasts suggest that e-commerce will continue to grow rapidly; Internet retailing – which was estimated to be $5.5 billion in the second quarter of 2000 – may rise to as high as $80 billion by 2002.23 Four industries that are being dramatically altered by the e-commerce boom are:
`The Book Industry. One prominent example of a retail “e-business” is Amazon.com, which became the first Internet retailer in the on-line book selling market. The emergence of Amazon forced its “bricks and mortar” competitors (e.g., Barnes and Noble) to reconsider their own e-commerce strategies. As a virtual retailer, Amazon has no physical store infrastructure. According to the Department of Commerce, rent and depreciation represent less than 4 percent of Amazon’s sales, compared to 13 percent, on average, for traditional retailers.24 Amazon also has lower labor costs and less capital tied up in inventory: book turnover averages 20-40 times per year relative to two to two-and-a-half times per year, on average, for traditional retailers.25 As a result, Amazon is able to reduce the sales price of books. Indeed, a study by Professors Erik Brynjolfsson and Michael Smith of MIT found that prices for books and CDs on-line are 9 to 16 percent less expensive than in conventional outlets.26 Lower prices, furthermore, have 23 Forrester Research, Inc. “Post-Web Retail--Market Overview,” September 1999, and Department of Commerce, Bureau of the Census, “Retail E-commerce Sales in Second Quarter 2000 Increased 5.3 Percent from First Quarter 2000, Census Bureau Reports,” August 31, 2000. 24 U.S. Department of Commerce, The Emerging Digital Economy, Appendix 5, page 9, available at http://www.ecommerce.gov. 25 Ibid. 26 Erik Brynjolfsson and Michael Smith, “A Comparison of Internet and Conventional Retailers” Management Science, April 2000. However, another study found that 107 titles sold by 13 on-line and two physical bookstores had essentially the same cost. See Karen Clay, Ramayya Krishnan, Eric Wolff, and Danny Fernandes, “Retail
`
`Petitioner Exhibit 1025 p.18
`
`
`

`

`•
`
`18spurred a substantial increase in volume. In 1999, Amazon’s revenue totalled $1.6 billion, up 168 percent from 1998.27 With 20 million customers in 160 countries, Amazon has clearly changed the dynamics of the book-selling industry.28
`Travel Planning Industry. From driving directions to hotel prices, the Internet has changed the way people obtain travel information. The largest on-line travel business is the sale of airline tickets. In 1996, consumers bought $276 million worth of airline tickets on-line. In 1999, on-line travel sales reached an estimated $9.4 billion – or 12.3 percent of the amount spent in the U.S. on air travel.29 Forrester Research predicts that on-line travel purchases will quadruple, to $40.7 billion, by 2003.30 As in the b