nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2013‒12‒29
six papers chosen by
Walter Frisch
University Vienna

  1. Investigation of ICT Firms' Decisions on R&D Investment By Wojciech Szewczyk; Juraj Stancik; Martin Aarøe Christensen
  2. Assessing the Benefits of Social Networks for Organizations By Michail Batikas; Rene Van Bavel
  3. The Nature and Incidence of Software Piracy: Evidence from Windows By Susan Athey; Scott Stern
  4. Determinants of Systemic Risk and Information Dissemination By Marcelo Bianconi; Xiaxin Hua; Chih Ming Tan
  5. To Block or not to Block? Network Competition when Skype enters the Mobile Market By Bipasa Datta; Yu-Shan Lo
  6. A Neural Network Demand System. By Julien Boelaert

  1. By: Wojciech Szewczyk; Juraj Stancik; Martin Aarøe Christensen (European Commission – JRC - IPTS)
    Abstract: The formulation of a macroeconomic model applied to the analysis of EU Research and Development (R&D) funding strategies in Information and Communication Technology (ICT) under the PREDICT 2 project stipulates a specification of the transmission mechanism of R&D funding policy on firms' R&D expenditures. To enlighten the understanding of ICT firms' investment decisions, the effect of various firm characteristics on firms' R&D activities is analysed on a representative sample of ICT sector firms in 16 EU member countries. The analysis covers two aspects of the firms' R&D activity. Firstly, R&D engagement characterising those firms which undertake in-house R&D projects on a continuous basis, and secondly, R&D expenditure measured as the firms' in-house expenditure on R&D projects per employee. The report finds that reception of public funding is positively related to ICT firms' R&D activity. The relation between public funding and firms' R&D activity is found to depend on funding sources. The results also show that national and international diffusion of knowledge through firms' cooperation with other enterprises and through international trade plays an important role for firms R&D activity. Finally, the results suggest that substantial differences exist in firms' R&D activity across countries and sectors.
    Keywords: ICT industry, Research and Development, Europe 2020, Digital Agenda for Europe
    JEL: C31 O31
    Date: 2013–12
  2. By: Michail Batikas (European Commission – JRC - IPTS); Rene Van Bavel (European Commission – JRC - IPTS)
    Abstract: Deliverable 2 of the SEA-SoNS ("Assessing the Benefits of Social Networks on Organizations”) project brings together results from different research activities, both qualitative and quantitative. Together, these results paint a picture of the benefits to organisations of social media, the barriers they face, and the scope for policy action. Phase 2 of SEA-SoNS, which built on the results of Phase 1, included a survey of 600 SMEs in six EU Member States (UK, Netherlands, Spain, Italy, Bulgaria and Latvia), five in-depth interviews conducted with micro firms (less than 10 employees) that use social media in four countries (Spain, Denmark, Netherlands and UK), and a summary of these findings with emphasis on identifying relevant factors for developing future scenarios. This report includes an executive summary and four annexes: the methodological report of the survey, the findings of the survey, the results of the in-depth interviews and a background document for the validation workshop that took place at Seville in July 2013.
    Keywords: Europe 2020, Digital Agenda for Europe, Digital Living, Digital Society, Digital Economy, Information Society, electronic Identity Systems, economic implications of personal data, Behavioural science and policy impacts
    Date: 2013–12
  3. By: Susan Athey; Scott Stern
    Abstract: This paper evaluates the nature, relative incidence and drivers of software piracy. In contrast to prior studies, we analyze data that allows us to measure piracy for a specific product – Windows 7 – which was associated with a significant level of private sector investment. Using anonymized telemetry data, we are able to characterize the ways in which piracy occurs, the relative incidence of piracy across different economic and institutional environments, and the impact of enforcement efforts on choices to install pirated versus paid software. We find that: (a) the vast majority of “retail piracy” can be attributed to a small number of widely distributed “hacks” that are available through the Internet, (b) the incidence of piracy varies significantly with the microeconomic and institutional environment, and (c) software piracy primarily focuses on the most “advanced” version of Windows (Windows Ultimate). After controlling for a small number of measures of institutional quality and broadband infrastructure, one important candidate driver of piracy – GDP per capita – has no significant impact on the observed piracy rate, while the innovation orientation of an economy is associated with a lower rate of piracy. Finally, we are able to evaluate how piracy changes in response to country-specific anti-piracy enforcement efforts against specific peer-to-peer websites; overall, we find no systematic evidence that such enforcement efforts have had an impact on the incidence of software piracy.
    JEL: L86 O34
    Date: 2013–12
  4. By: Marcelo Bianconi; Xiaxin Hua; Chih Ming Tan
    Abstract: We study the effects of two measures of information dissemination on the determination of systemic risk. One measure is print-media consumer sentiment based while the other is volatility based. We find evidence that while the volatility measure (VIX) of future expectations has a more significant direct impact upon systemic risk of financial firms under distress, a consumer sentiment measure based on print-media news does impact upon firm's financial stress via the externality of other firm's financial stress. This latter effect is robust even though the VIX and the consumer sentiment have dynamic feedback in the short one and two-day horizon in levels, and contemporaneously in volatility. In reference to the internet bubble of the 1990s, the consumer sentiment measure predicts larger systemic risk in the whole period of exuberance while the VIX predicts a sharp larger systemic risk in the height of the bubble. Our evidence suggests that print-media consumer sentiment might be dominated by the VIX when predicting systemic risk.
    Keywords: conditional value-at-risk, VIX, externality, consumer sentiment
    JEL: G00 G14
    Date: 2013
  5. By: Bipasa Datta; Yu-Shan Lo
    Abstract: Voice over Internet Protocol (VoIP) such as Skype that enables users to make free internet-based calls to other users has been seen as a threat to voice revenues by traditional network operators. While some mobile network operators (MNOs) attempt to block Skype's entry on their networks, some actually welcome it even if it apparently conflicts with their interests in making calling profits. In this paper we develop a Hotelling-style model of network competition between two MNOs to analyse their incentives to accommodate or block Skype. We find that accommodation is the dominant strategy of an MNO whenever its equilibrium voice market share is at least 29%. Furthermore, the overall Nash equilibium of the game can be either symmetric (where Skype's entry is either accommodated or blocked by both MNOs) or asymmetric (where only one has the incentive to accommodate) depending upon the consumers' preference for a certain network and the quality of Skype-based interconnection. In a symmetric accommodation equilibrium, the MNO with a lower (higher) customer valuation is better-off (worse-off) relative to the one where entry is blocked.
    Keywords: Mobile network competition; Hotelling model, Voice over IP and Skype; entry; voice and network market shares
    JEL: D43 L13 L96
    Date: 2013–12
  6. By: Julien Boelaert (Centre d'Economie de la Sorbonne)
    Abstract: We introduce a new type of demand system using a feedforward artificial neural network. The neural network demand system is a flexible system that requires few hypotheses, has no roots in consumer theory but may be used to test it. We use the system to estimate demand elasticities on micro data of household consumption in Canada between 2004 and 2008, and compare the results to those of the quadratic almost ideal demand system.
    Keywords: Estimating demand systems, neural networks, flexible forms, Quadratic Almost Ideal Demand System (QUAIDS).
    JEL: C45 D12
    Date: 2013–12

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