Can the network economy be left to itself? Professor Luc Soete of the Maastricht University in The Netherlands pointed to 'scarcity' as a core concept. Only when there is scarcity, will the market use the price mechanism to come to equilibrium. Soete named the interesting

example of ground space and environment where the price mechanism can solve the scarcity problem very well. "With the use of the price mechanism one gets a better division of scarce means," according to Soete. Nonetheless, in the information economy scarcity isn't an issue. "Immaterial goods - information - are characterized by abundance," adds Soete. And the government should therefore define rules and block off monopoly building. Soete ask the question how far the government should involve itself in the information economy? "Do not expect the role of the government to diminish," conclude Shapiro and Varian. As an ex-assistant of the anti-trust department of the American Department of Justice, Shapiro can look at his own, broad experience. Mergers, takeovers, and distributor practices, exclusivity clauses in contract - all of these will have to be scrutinized by the government.

Do you agree with Luc Soete that the price mechanism will solve the scarcity problem in any economy - including in the 'new' network economy? Please explain how and why you came to your answer.