nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2012‒03‒28
four papers chosen by
Walter Frisch
University Vienna

  1. Do privacy laws affect the location decisions of internet firms? evidence for privacy havens By ROCHELANDET, Fabrice; TAI, Silvio H.T.
  2. Comparing the Determinants of Internet and Cell Phone Use in Africa : Evidence from Gabon By Thierry Pénard; Nicolas Poussing; Gabriel Zomo Yebe; Philémon Nsi Ella
  3. Migration to the Cloud Ecosystem: Ushering in a New Generation of Platform Competition By Fershtman, Chaim; Gandal, Neil
  4. Fixed-to-Mobile Substitution in the European Union By Lukasz Grzybowski

  1. By: ROCHELANDET, Fabrice; TAI, Silvio H.T.
    Abstract: This paper empirically studies the location decisions of internet firms when they face high legal standards of privacy protection. Many factors might influence them: technological spillovers, lower taxation, and so on. Internet firms can also arbitrate national differences and many of them actually locate their activity in order to escape from national laws they consider over-stringent. In the current stage of development of the internet – the so-called Web 2.0 – the ease of access to personal data proved to be strategic input. So the more a jurisdiction makes collecting and using these data easy, the more attractive the country is, if all other things remain constant. One way for a firm to avoid such legal restrictions is to locate or to expand its business in less privacy protective countries. Our empirical results support this 'no-privacy haven' hypothesis. In particular, we highlight a new privacy paradox according to which the more stringent certain online privacy laws are, the more they induce firms to locate their business in less stringent countries, and finally the weaker actual privacy protection on the internet is.
    Keywords: Privacy; Firms’ Location; Internet
    JEL: K29 F23 L86
    Date: 2012
  2. By: Thierry Pénard (University of Rennes 1 - CREM, (UMR 6211 CNRS) & M@rsouin); Nicolas Poussing (CEPS/INSTEAD (LUXEMBOURG) & CREM-CNRS, UMR 6211); Gabriel Zomo Yebe (Université Omar Bongo de Libreville (Gabon)); Philémon Nsi Ella (Université Omar Bongo de Libreville (Gabon))
    Abstract: Within developed countries, the market penetration of cell phones and the Internet has progressed in tandem and the point of market saturation is nearly to be reached in both markets. In contrast, the African continent has been characterized by a more uneven level of progress, with the penetration of cell phones (41% in 2010) considerably outpacing the penetration of the Internet (9.6% in 2010). The question is then raised as to whether cell phone and Internet services in Africa are following the same path towards widespread diffusion, yet with a several-year time delay, or alternatively has the expansion of Internet use been constrained by the presence of specific obstacles? The objective of this article is to compare the determinants and hindrances of both Internet and cell phone use in Gabon, based on individual survey data. Our econometric results show that the primary factors stimulating Internet use consist of a high level of education and computer skill. Social neighborhood also plays a major role in the Internet adoption process. As regards cell-phone use, the main obstacles would be economic in nature. Finally, an individual's age has a positive impact on cell phone use and negative impact on Internet use. The differences identified in both penetration and user profiles between Internet and cell phone service should motivate African governments to develop digital policies more heavily focused on a wider dissemination of cell phones in order to make innovative services and applications (e.g. in the field of health or education) available to as broad a population as possible.
    Keywords: Internet Use, Cell-phone Use, IT Diffusion, Digital Divide, Africa
    JEL: L5 L9 O14 O33 O57
    Date: 2012–03
  3. By: Fershtman, Chaim; Gandal, Neil
    Abstract: Cloud computing is defined to be Internet based computing technology, where the term 'cloud' simply means Internet -- and cloud computing refers to services that are accessed directly over the Internet. There are essentially three categories of cloud computing. (i) Iaas (Infrastructure as a Service) -- number crunching, data storage and management services (computer servers), (ii), SaaS (Software as a Service) -- ‘web based’ applications, and (iii) PaaS (Platform as a Service) -- essentially an operating system in the cloud. Much of the attention and literature has focused on the revolution in Iaas services provided via the cloud. Despite the major changes in technology in IaaS services, estimates indicate that more than 90% of the cloud computing market (in terms of revenues) will involve (virtual) operating systems and applications software services (i.e., PaaS and SaaS services.) In this paper, we examine how several key economic factors will likely affect competition in SaaS/PaaS services in the cloud.
    Keywords: cloud computing; network effects; platform competition; two-sided markets
    JEL: L13 L86
    Date: 2012–03
  4. By: Lukasz Grzybowski
    Abstract: This paper analyzes substitution between access to fixed-line and mobile telephony in the European Union. We estimate a structural model of household's demand for: (i) fixed-line only; (ii) mobile only; (iii) and both fixed-line and mobile access. We find that decreasing prices for mobile services increase the share of 'mobile only' households and decrease shares of 'fixed only' and 'fixed + mobile' households which suggests substitution between fixed-line and mobile connections. Moreover, growing Internet and DSL usage increase the share of 'fixed + mobile' households, which suggests that households keep their fixed line connection to access Internet. However, spread of 3G and cable modem broadband access decreases the share of 'fixed + mobile' households and increases the share of 'mobile only' households. Hence, in the future, fixed-line connection used for Internet access may be substituted by mobile broadband, as was in the case of voice telephony. On the other hand, bundling increases the share of 'fixed + mobile' households and decreases the shares of 'mobile only' and 'fixed only' households, which suggests that firms which provide both fixed-line and mobile services may slow down the substitution by bundling products.
    Keywords: Fixed-To-Mobile Substitution; Fixed Broadband; Mobile Broadband
    JEL: L13 L43 L96
    Date: 2012

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