Policy Documents

A History of Cronyism and Capture in the Information Technology Sector

Adam Thierer, and Brent Skorup –
July 16, 2013

In this working paper, the authors write that the evolution of government-granted privileges, or “cronyism,” in the information and communications technology marketplace and in the media-producing sectors. It also shows that cronyism is slowly creeping into new high-technology sectors. This influence could dull entrepreneurialism and competition in this highly innovative sector since time and resources spent on influencing politicians and capturing regulators cannot be spent competing and innovating in the marketplace. Cronyism will also negatively impact consumer welfare by denying consumers more and better products and services. Additionally, consumers might end up paying higher prices or higher taxes due to government privileges for industry. Finally, this paper offers strategies for stalling and diminishing the cronyism already taking root in the high-tech sector.