the rate and precise direction of technological change, with consequences for both the supercomputer market and the evolution of computing more generally.

It is important to emphasize that federal intervention in a technologically dynamic industry can be costly and disruptive, substantially limiting the efficiency and incentives provided by competitive markets. Many economists question the desirability of government involvement in the development and commercialization of new technology; government intervention can often be a far from benign influence on the market for new technologies.3 First, attempts to promote standardization through procurement can result in inadequate diversity, reducing the degree of technological experimentation. Inadequate experimentation with a variety of new technologies can be particularly costly in areas like supercomputing, where much of the realized value of a given technology is only realized over time through user experience and learning. Second, individual firms and vendors supporting specific supercomputer architectures may attempt to exert political influence over the procurement process itself. When such rent seeking occurs, government purchasing decisions may be based on the political influence of a firm rather than on its ability to meet the needs of government agencies in terms of performance and cost.

Given that government intervention may come with substantial costs, it is important to consider the types of interventions that the government can undertake and some of the key trade-offs that policymakers might consider as they develop and implement policy towards supercomputing.

ALTERNATIVE MODES FOR GOVERNMENT INTERVENTION

Almost by definition, government intervention in the supercomputer industry influences the allocation of resources toward supercomputing technology. However, the government has wide latitude in choosing the form of its intervention, and each type of intervention has its own costs and benefits. In large part, the government’s optimal choice of intervention and involvement depends on the balance between the specific mission-oriented objectives of individual agencies and the broader goal of encouraging technological progress in supercomputing (and information technology more generally).

The government has two main avenues for increasing innovation in

3  

Linda Cohen and Roger Noll. 1991. The Technology Pork Barrel. Washington, D.C.: Brookings Institution Press.



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