nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2007‒06‒11
three papers chosen by
Walter Frisch
University Vienna

  1. The impact of ICT on the growth of the service industries By Koson Sapprasert
  2. Why Should Governments Support Broadband Adoption? By Kolko, Jed
  3. Economic Experiments and Neutrality in Internet Access By Shane Greenstein

  1. By: Koson Sapprasert (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: This paper explores the productive relationship between Information and Communication Technology (ICT) and services. The firm-level data is pursued to examine how ICT as a technological innovation combined with non-technological factors affect the firm’s economic performance. The study develops an argument that ICT is one of the key economic success factors in this techno-economic paradigm, particularly for service firms. The results demonstrate that the presence and intensity of ICT may be used to explain the higher growth experienced by the service industries in the last few decades. Both productivity and profitability growth are found to be significantly linked to the level of ICT intensity in service firms especially when undertaken jointly with non-technological innovations. The impact of ICT on the service sector is assessed in detail while manufacturing and other innovation activities serve as a benchmark.
    Keywords: Information and Communication Technology (ICT), Innovation in Services, Techno-economic paradigm, Productivity and Profitability Growth, Non-technological Innovation, Firm-level Analysis.
    JEL: O32
    Date: 2007–05
  2. By: Kolko, Jed
    Abstract: Governments justify support of Internet diffusion on two grounds: (1) to overcome a persistent digital divide in broadband availability and (2) to facilitate online activities that are socially or economically desirable. This paper assesses both these claims. Using individual-level data from Forrester Research, the analysis finds significantly lower residential broadband adoption in lower-income and lower-density zip codes, controlling for individual characteristics. Further tests show that lower adoption in these areas is evidence of a persistent digital divide in availability. The analysis then assesses how broadband adoption changes individuals’ usage of online activities. Broadband adoption increases individuals’ frequency of researching health information online, but there is no evidence that broadband adoption increases usage of online job sites or online government services. Localities currently considering municipal wireless (Wi-Fi) initiatives should focus on digital divide justifications rather than expecting to raise usage of a wide range of online activities perceived to be socially desirable.
    Keywords: broadband; Internet; digital divide; online; consumer behavior
    JEL: L96 D12 O33
    Date: 2006–11
  3. By: Shane Greenstein
    Abstract: Economic experiments yield lessons to firms that can be acquired only through market experience. Economic experiments cannot take place in a laboratory; scientists, engineers, or marketing executives cannot distill equivalent lessons from simply building a prototype or interviewing potential customers and vendors. The historical record illustrates that economic experiments were important for value creation in Internet access markets. In general, industry-wide returns from economic experiments exceed private returns, with several important exceptions. Those conclusions motivate an inquiry into whether regulatory policy can play a role in fostering the creation of value. The net neutrality debate is reinterpreted through this lens. A three part test is proposed for encouraging economic experiments from both broadband carriers and providers of complementary services.
    JEL: L5 L86 L96 O31
    Date: 2007–06

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