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Looking Back at the Crash: What Have We Really Learned About the Digital Economy?

Thursday July 2003


Stanley Liebowitz, Ph.D. Professor of Managerial Economics, University of Texas at Dallas Author, Re-Thinking the Network Economy: The True Forces that Drive the Digital Market Place (Anacom, 2002)

In hindsight, it’s easy to recognize much of the excitement generated by “e-commerce” as irrational exuberance. At the time, however, many individuals thought that we were witnessing the birth of a new business paradigm and that new rules were needed for a new economy.

Bad ideas, such as those that lead to the NASDAQ collapse, do not grow in vacuums. In fact, they came from well-respected and influential economists who put forward a view of markets where being first in the market was just about the only rule that a firm needed to follow in order to be successful.

“First-mover-wins” and “lock-in” are the names for these theories, and they are still influential even after the Internet meltdown should have discredited them. Indeed, these theories were shown to be empirically untenable before the Internet meltdown, yet that knowledge did little to impede a public eager to cash in on novel market theories.

Professor Stanley Liebowitz will explore the genesis of these failed ideas and discuss what investors have yet to understand about the real forces driving the networked economy.