nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2007‒11‒10
five papers chosen by
Walter Frisch
University Vienna

  1. Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records By Catherine Tucker; Amalia Miller
  2. The Determinants of Price in Online Auctions: More Evidence from Quantile Regression By Sun, Chia-Hung; Hsu, Ming-Fei
  3. Strategic Information Transmission through the Media By Jung, Hanjoon Michael
  4. Online Peer-to-peer Communities: An Empirical Investigation of a Music Sharing Network as a Dynamic Two-sided Network By Bin Gu; Yun Huang; Wenjing Duan; Andrew B. Whinston
  5. Standards Competition In The Presence Of Digital Conversion Technology: An Empirical Analysis Of The Flash Memory Card Market By Charles Z. Liu; Chris F. Kemerer; Michael D. Smith

  1. By: Catherine Tucker (MIT Sloan); Amalia Miller (Department of Economics, University of Virginia)
    Abstract: Some policymakers argue that consumers need legal protection of their privacy before they adopt interactive technologies. Others contend that privacy regulations impose costs that deter adoption. We contribute to this growing debate by quantifying the effect of state privacy regulation on the diffusion of Electronic Medical Record technology (EMR). EMR allows medical providers to store and exchange patient information using computers rather than paper records. Hospitals may not adopt EMR if patients feel their privacy is not safeguarded by regulation. Alternatively, privacy protection may inhibit adoption if hospitals cannot benefit from exchanging patient information with one another. In the US, medical privacy laws that restrict the ability of hospitals to disclose patient information vary across time and across states. We exploit this variation to explore how privacy laws affect whether hospitals adopt EMR. Our results suggest that inhibition of EMR's network benefits reduces hospital adoption by up to 25 percent. We find similar evidence when we control for the endogeneity of state laws using variation in signups to the Do Not Call list.
    Keywords: Technology adoption, privacy laws, network effects, hospitals
    JEL: I1 K2 L5 O3
    Date: 2007–09
  2. By: Sun, Chia-Hung (University of Wollongong); Hsu, Ming-Fei (National Chung Cheng University, Taiwan)
    Abstract: This study explores how seller reputations affect auction prices, and concludes that earlier findings may be biased due to the misspecification of seller reputation. This paper contributes to the literature by offering significant empirical evidence using Taiwanese Internet auction data. Our study reveals that the influence of seller reputations on auction prices is significant, irrespective of the assumptions of linear and non-linear relationships with price. However, failure to consider the non-linear setting of seller reputation would have led us to overestimate the impact of reputations on prices because marginal returns to an incremental increase in reputation declines rapidly for sellers who have more than 15 scores. In addition, using quantile regression, this study finds evidence of considerable differences in their impact on auction prices dependent on the distribution of price levels.
    Keywords: Internet auction, reputation, Taiwan, Yahoo! Kimo, quantile regression
    JEL: D8 D44 L86
    Date: 2007
  3. By: Jung, Hanjoon Michael
    Abstract: We model media manipulation in which a sender or senders manipulate information through the media to influence receivers. We show that if there is only one sender who has a conditional preference for maintaining its credibility in reporting accurate information and if the receivers face a coordination situation without information about their opponents' types, the sender could influence the receivers to make decisions according to the sender's primary preference by manipulating the information through the media, which makes the report common knowledge. This is true even when the sender and the receivers have contradictory primary preferences. This result extends to the cases in which the sender has imperfect information or in which the sender's primary preference is to maintain its credibility. In the case of multiple senders, however, when there is enough competition among the senders or when simultaneous reporting takes place, the receivers could play their favored outcome against senders' preferences, which sheds light on a solution to the media manipulation problem.
    Keywords: Arms Race; Common Knowledge; Information Transmission; Media Bias; Media Competition; Media Manipulation.
    JEL: D83 D82 C72
    Date: 2007–08
  4. By: Bin Gu (McCombs School of Business, University of Texas at Austin); Yun Huang (McCormick School of Engineering and Applied Science, Northwestern University); Wenjing Duan (George Washington University); Andrew B. Whinston (McCombs School of Business, University of Texas at Austin)
    Abstract: Online peer-to-peer communities and online social networks have become increasingly popular. In particular, the recent boost of online peer-to-peer communities leads to exponential growth in sharing of user-contributed content which have brought profound changes to business and economic practices. Understanding the formation and sustainability of such peer-to-peer communities has important implications for businesses. We develop a dynamic two-sided network model that relates growth of communities to interactions between contribution and consumption of resources in online sharing activities. Using online music sharing data collected from a popular IRC music sharing service over five years, we empirically apply the model to identify dynamics in the music sharing community. We find that the music sharing community demonstrates distinctive characteristics of a two-sided network. Contribution in the community leads to more consumption and consumption leads to more contribution, creating positive network effects in the community. Moreover, we find significant negative externalities among consumption activities and among contribution activities. The combination of the positive and negative externalities drives the underlying dynamics and growth of online sharing communities. Using the dynamic model, we quantify equilibrium growth rate of the community. We find that the equilibrium growth rate changes over time, possibly as a result of legal actions taken by the music industry. Our study provides a first glimpse into the mechanism through which peer-to-peer communities sustain and thrive in a constantly changing environment.
    Keywords: online communities, two-sided networks, IRC channel, peer-to-peer network, evolutionary games, digital piracy
    JEL: L14 C73 O34
    Date: 2007–10
  5. By: Charles Z. Liu (Katz Graduate School of Business, University of Pittsburgh); Chris F. Kemerer (Katz Graduate School of Business, University of Pittsburgh); Michael D. Smith (Heinz School of Public Policy and Management, Carnegie Mellon University)
    Abstract: Both theoretical and empirical evidence suggest that in markets with standards competition, strong network effects can make the strong grow stronger and, in some circumstances, even “tip” the market towards a single, winner-take-all standard. We theorize that in the presence of low cost conversion technologies and digital content, the tendency towards market dominance can be lessened to the point where multiple incompatible standards are viable. Our hypotheses are empirically examined in the context of the flash memory card market where both network effects and high quality conversion are present. The results show that the availability of digital converters reduces the price premium of the leading flash card formats more than of the minority formats. Therefore, producers of the non-dominant standards can be better off with the provision of conversion technology as this technology neutralizes the impact of network effects that would have otherwise been more potent. We discuss both the social and private implications of our findings.
    Keywords: network effects, standards competition, conversion technologies, flash memory, digital goods
    JEL: C12 C23 D62 L11 L15
    Date: 2007–09

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