nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2006‒02‒26
five papers chosen by
Walter Frisch
University Vienna

  1. Estimating Static Models of Strategic Interaction By Patrick Bajari; Han Hong; John Krainer; Denis Nekipelov
  2. The Economics of Free and Open Source Software: Contributions to a Government Policy on Open Source Software By Marcel Boyer; Jacques Robert
  3. Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet By Austan Goolsbee; Peter J. Klenow
  4. Open Government Architecture: The evolution of De Jure Standards, Consortium Standards, and Open Source Software By François Coallier; Robert Gérin-Lajoie
  5. The Value of Broadband and the Deadweight Loss of Taxing New Technology By Austan Goolsbee

  1. By: Patrick Bajari; Han Hong; John Krainer; Denis Nekipelov
    Abstract: We propose a method for estimating static games of incomplete information. A static game is a generalization of a discrete choice model, such as a multinomial logit or probit, which allows the actions of a group of agents to be interdependent. Unlike most earlier work, the method we propose is semiparametric and does not require the covariates to lie in a discrete set. While the estimator we propose is quite flexible, we demonstrate that in most cases it can be easily implemented using standard statistical packages such as STATA. We also propose an algorithm for simulating the model which finds all equilibria to the game. As an application of our estimator, we study recommendations for high technology stocks between 1998-2003. We find that strategic motives, typically ignored in the empirical literature, appear to be an important consideration in the recommendations submitted by equity analysts.
    JEL: L0 L5 C1
    Date: 2006–02
  2. By: Marcel Boyer; Jacques Robert
    Abstract: This document seeks to lay the groundwork for a government policy on free and open source software. We briefly characterize the extent of the open source software phenomenon. We analyse its pros and cons for the government, in its role as both an engine of economic development and a large user of information and communications technologies. We conclude with a series of recommendations for the government, as both “economic and industrial policy maker” and “large user.” <P>
    Keywords: free software, intellectual property rights, free source code, open source code, free operating system, GPL licence, BSD licence, innovation, forking,
    Date: 2006–02–01
  3. By: Austan Goolsbee; Peter J. Klenow
    Abstract: For some goods, the main cost of buying the product is not the price but rather the time it takes to use them. Only about 0.2% of consumer spending in the U.S., for example, went for Internet access in 2004 yet time use data indicates that people spend around 10% of their entire leisure time going online. For such goods, estimating price elasticities with expenditure data can be difficult, and, therefore, estimated welfare gains highly uncertain. We show that for time-intensive goods like the Internet, a simple model in which both expenditure and time contribute to consumption can be used to estimate the consumer gains from a good using just the data on time use and the opportunity cost of people's time (i.e., the wage). The theory predicts that higher wage internet subscribers should spend less time online (for non-work reasons) and the degree to which that is true identifies the elasticity of demand. Based on expenditure and time use data and our elasticity estimate, we calculate that consumer surplus from the Internet may be around 2% of full-income, or several thousand dollars per user. This is an order of magnitude larger than what one obtains from a back-of-the-envelope calculation using data from expenditures.
    JEL: D6 L0
    Date: 2006–02
  4. By: François Coallier; Robert Gérin-Lajoie
    Abstract: Conducted for the Treasury Board of Québec, this study seeks to present recent contributions to the evolution, within an enterprise architecture context, of de jure and de facto standards by various actors in the milieu, industrial consortia, and international standardization committees active in open source software.<P> In order to be able to achieve its goals of delivering services to citizens and society, the Government of Québec must integrate its computer systems to create a service oriented open architecture.<P> Following in the footsteps of various other governments and the European Community, such an integration will require elaboration of an interoperability framework, i.e. a structured set of de jure standards, de facto standards, specifications, and policies allowing computer systems to interoperate.<P> Thus, we recommend that the Government of Québec:<P> <UL> <LI>Pursue its endeavours to elaborate an interoperability framework for its computer systems that is based on open de jure and de facto standards. This framework should not only reflect the criteria enumerated in this study and apply to internal computer systems, but it should also extend to Web services supplied to organizations outside of the government. This framework should explicitly prioritize open source de jure and de facto standards and include a policy covering free software. The interoperability framework should initially draw on that of the state of Massachusetts. In the medium term, is should be as comprehensive as that of the British government.<P> <LI>Integrate this interoperability framework into its enterprise architecture.<P> <LI>Publish this interoperability framework with its enterprise architecture.<P> <LI>Specify this interoperability framework in its calls for tenders.<P> <LI>Elaborate a policy of compliance with this framework for all new applications. <P>
    Date: 2006–02–01
  5. By: Austan Goolsbee
    Abstract: With fixed costs of developing technology, taxes can generate large efficiency costs by slowing the rate of diffusion and these costs are not accounted for in conventional analyses. This paper illustrates this by analyzing the impact that taxes would have had on broadband Internet access at an early stage of its diffusion around the country, combining data on individual demand by area with data on supplier entry in those markets. Applying a tax to broadband in 1998 would have reduced the quantity and generate a large deadweight loss in the conventional model but when the analysis accounts for the fixed costs of entering new markets, taxes would have also delayed entry in several markets. In these places, the lost consumer surplus from delay is an additional deadweight loss and it more than doubles the estimated efficiency costs of taxation. The conventional model also dramatically understates the share of tax burden that would have been borne by customers.
    JEL: H2 D6
    Date: 2006–02

This nep-ict issue is ©2006 by Walter Frisch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.