It is likely that supercomputing will be increasingly important to homeland security. Examples include micrometeorology analysis to combat biological terrorism and computer forensic analysis in the wake of terrorist bombings. The federal government must be able to guarantee that such systems do what they are intended to do. Moreover, these programs must ensure that, while supercomputers are available to U.S. security agencies with no hindrance and with capabilities that satisfy their needs, other countries can be prevented from achieving key capabilities in supercomputing. To achieve this balancing act, the relevant federal agencies and research laboratories must often be closely involved in critical aspects of supercomputing R&D, even when the research and development are carried out in the private sector.

As the social custodian of well-defined government missions and the largest and most aggressive customer for new technology related to these missions, the government has an incentive to ensure appropriate and effective funding for innovative supercomputing investments so as to guarantee that the technology progresses at a rate and in a direction that serve the missions.


The public goods nature of supercomputer investment is a second broad rationale for government intervention. In contrast to purely private goods (such as hot dogs or pencils, which only one person owns and consumes), public goods are nonrival (many consumers can take advantage of the good without diminishing the ability of other consumers to enjoy it) and nonexcludable (suppliers cannot prevent some people from using the good while allowing others to do so). National defense is an important example of a public good. Even though the national defense protects one person, it can still protect others (nonrival), and the national defense cannot protect some people without also protecting others (nonexcludable).

When a market involves goods that are both nonrival and nonexcludable, innovators are unable to capture the full value of their inventions, so the incentive for an individual firm to undertake investment is less than the socially optimal level of incentive. In the absence of government intervention or coordinated action, the underinvestment problem tends to be most serious for basic research, fundamental scientific discoveries, technologies that serve as stepping-stones for follow-on research by others, and software.

Both policymakers and economists have emphasized the public goods rationale for government intervention in areas like supercomputing technology. In large part, and as discussed in more detail in Chapter 3 (and

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