nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2014‒05‒17
nine papers chosen by
Walter Frisch
University Vienna

  1. Online and offline social participation and social poverty traps. Can social networks save human relations? By A. Antoci; F. Sabatini; M. Sodini
  2. The Economics of Private Digital Currency By Dwyer, Gerald P
  3. Measuring the UK’s Digital Economy With Big Data By Dr Anna Rosso; Dr Max Nathan
  4. ICT as a general purpose technology: spillovers, absorptive capacity and productivity performance By Francesco Venturini; Ana Rincon-Aznar; Dr Michela Vecchi
  5. In brief - New technology: who wins, who loses? By John Van Reenen; Nicholas Bloom; Luis Garicano; Raffaella Sadun
  6. Delivering ICT Shared Services to Local Governments:A new species of public enterprise? By Maddalena SORRENTINO; Massimo SIMONETTA Author-X-Name-First: Massimo
  7. Market Structure and Market Performance in E-Commerce By Franz Hackl; Michael E. Kummer; Rudolf Winter-Ebmer; Christine Zulehner
  8. Banning Foreign Pharmacies from Sponsored Search: The Online Consumer Response By Matthew Chesnes; Weijia (Daisy) Dai; Ginger Zhe Jin
  9. Preferences for Data Privacy: Sharing Personal Information with Close and Distant Peers By Schudy, Simeon; Utikal, Verena

  1. By: A. Antoci; F. Sabatini; M. Sodini
    Abstract: In this study, we develop an evolutionary game model to analyse how human relations evolve in a context characterised by declining face-to-face interactions and growing online social participation. Our results suggest that online networks may constitute a coping response allowing individuals to “defend” their social life from increasing busyness and a reduction in the time available for leisure. Internet-mediated interaction can play a positive role in preventing the disruption of ties and the weakening of community life documented by empirical studies. In this scenario, the digital divide is likely to become an increasingly relevant factor of social exclusion, which may exacerbate inequalities in well-being and capabilities.
    Keywords: well-being, social participation, social capital, online networks, digital divide
    JEL: Z13 O33 D85 C73
    Date: 2014
  2. By: Dwyer, Gerald P
    Abstract: Recent innovations have made it feasible to transfer private digital currency without the intervention of an institution. A digital currency must prevent users from spending their balances more than once, which is easier said than done with purely digital currencies. Current digital currencies such as Bitcoin use peer-to-peer networks and open-source software to stop double spending and create finality of transactions. This paper explains how the use of these technologies and limitation of the quantity produced can create an equilibrium in which a digital currency has a positive value. This paper also summarizes the rise of 24/7 trading on computerized markets in Bitcoin in which there are no brokers or other agents, a remarkable innovation in financial markets. I conclude that exchanges of foreign currency may be the obvious way in which use of digital currencies can become widespread and that Bitcoin is likely to limit governments’ revenue from inflation.
    Keywords: digital currency, private currency, bitcoin, litecoin
    JEL: E4 E41 E42
    Date: 2014–05–08
  3. By: Dr Anna Rosso; Dr Max Nathan
    Abstract: KEY FINDINGS • The digital economy is poorly served by conventional definitions and datasets. Big data methods can provide richer, more informative and more up to date analysis. • Using Growth Intelligence data on a benchmarking sample, we find that the digital economy is substantially larger than conventional estimates suggest. On our preferred measure, it comprises almost 270,000 active companies in the UK (14.4% of all companies as of August 2012). This compares to 167,000 companies (10.0%) when the Government’s conventional SIC-based definitions are used. • SIC-based definitions of the digital economy miss out a large number of companies in business and domestic software, architectural activities, engineering, and engineering-related scientific and technical consulting, among other sectors. • Companies in the digital economy have a similar average age to those outside it. Shares of start-ups (companies up to three years old) are very similar. Given the popular image of the digital economy as start-up dominated, this may be surprising to some. As digital platforms and tools spread out into the wider economy, and become pervasive in a greater number of sectors, so the set of ‘digital’ companies widens. • Inflows of digital companies into the economy have always been relatively small, given its sectoral share. However, using our new definitions of the digital economy, inflow levels are substantially higher. • As far as we can tell, digital economy companies have lower average revenues than the rest of the economy, but the median digital company has higher revenues than the median company elsewhere in the economy. Revenue growth rates are also higher for digital companies. However, these results come from a sub-sample of older, likely stronger-performing companies, so there is some positive selection at work. • Switching from SIC-based to Growth Intelligence derived measures substantially increases the digital economy’s share of employment, from around 5% to 11% of jobs. Digital economy companies also show higher average employment than companies in the rest of the economy (this reverses when we use conventional SIC-based measures of the digital economy). Looking at median employees per firm, the digital/non-digital differences are always a lot smaller. Our employment results should also be treated with some care, as not all companies report their workforce information. • The digital economy is highly concentrated in a few locations around the UK: Growth Intelligence software provides a fresh look at these patterns. In terms of raw firm counts, London dominates the pictures, but Manchester, Birmingham, Brighton and locations in the Greater South East (such as Reading and Crawley) also feature in the top 10. Location quotients show the extent of local clustering, which for the UK’s digital economy is highest for areas in the Western arc around London, such as Basingstoke, Newbury and Milton Keynes. Areas like Aberdeen and Middlesbrough also show high concentrations of digital economy activity. Report - short version
    Date: 2013–07
  4. By: Francesco Venturini; Ana Rincon-Aznar; Dr Michela Vecchi
    Abstract: We analyse the impact of ICT spillovers on productivity using company data for the U.S. We account for inter- and intra-industry spillovers and assess the role played by firm’s absorptive capacity. Our results show that intra-industry ICT spillovers have a contemporaneous negative effect that turns positive 5 years after the initial investment. For inter-industry spillovers both contemporaneous and lagged effects are positive and significant. In the short run, companies’ innovative effort is complementary to ICT spillovers, but such complementarity disappears with the more pervasive adoption and diffusion of the technology.
    Date: 2013–11
  5. By: John Van Reenen; Nicholas Bloom; Luis Garicano; Raffaella Sadun
    Abstract: Technology has transformed the once powerful office of ambassador into a glorified sales position, while nurses, teaching assistants and medical technicians all benefit from the ICT revolution. According to an empirical study by Professor John Van Reenen and colleagues, these contrasting fortunes arise from the fact that different technologies can have very different effects on the labour market. Information technologies, which provide access to stored data, tend to empower frontline workers, while communications technologies like email tend to increase the centralisation of firms, putting more power in the hands of senior managers in corporate headquarters and reducing their employees' personal autonomy.
    Keywords: Organisation, delegation, information technology, communication technology, the theory of the firm
    JEL: O31 O32 O33 F23
    Date: 2014–05
  6. By: Maddalena SORRENTINO (Università degli Studi di Milano, Dipartimento di Economia, Management e Metodi quantitativi, Italy); Massimo SIMONETTA Author-X-Name-First: Massimo (Ancitel Lombardia, Cologno Monzese (Milano), Italy)
    Abstract: The past decades have seen the OECD countries attempt a number of sourcing practices in local governments, including corporatization, collaborative arrangements and partnerships. One such option is to share services, an emerging strategy that casts a new actor in a leading role, i.e., the shared service organization or ‘SSO’. In the field of Information and Communication Technology (ICT) these special-purpose vehicles deliver services to the sharing councils based on models other than publicly funded collaboration arrangements and the usual ICT outsourcing practices. The paper uses an explorative case study to analyse the SSO route taken by an Italian enterprise, wholly owned by a public utility, in which it steers and guides its client councils on their ICT strategies. The article offers a general reflection on the new SSO’s operating model, discussing its hybrid nature (part-private and part-public), the system of multiple local relations and the indirect influence the SSO has over the ICT decisions of the client councils.
    Keywords: Shared service, Sourcing arrangements, ICT, Public enterprises, Organization studies
    Date: 2013–09
  7. By: Franz Hackl; Michael E. Kummer; Rudolf Winter-Ebmer; Christine Zulehner
    Abstract: We analyze the interaction between market structure and market performance and how it varies over the product cycle. To account for the potential endogeneity in this relation, we use an instrumental variable approach. We combine data from the largest Austrian online market for price comparisons with retail data on wholesale prices provided by a major hardware producer for consumer electronics. Our results show that instrumenting is important for estimating the empirical effect of competition on the markup of the price leader. One more firm in the market is associated with a reduction of the price leader’s markup which is equivalent to competition between existing firms for an additional three weeks in the product life cycle. Our results support search theoretic models and contradict models of monopolistic competition. Moreover our results support the existence of price dynamics over the product cycle. They also highlight the substitutability between newly innovated and old expiring technologies and how it varies with respect to competitors’ and own brand innovations.
    Keywords: Retailing, Product Life cycle, Market Structure, Market Performance, Markup, Price Dispersion
    JEL: L11 L13 L81 D43
    Date: 2014–01
  8. By: Matthew Chesnes; Weijia (Daisy) Dai; Ginger Zhe Jin
    Abstract: Increased competition from the Internet has raised a concern of product quality for online prescription drugs. The Food and Drug Administration (FDA) prohibits the importation of unapproved drugs into the US and the National Association of Boards of Pharmacy (NABP) emphasizes their illegality and cites examples of unsafe drugs from rogue pharmacies. An investigation by the Department of Justice (DOJ) revealed that Google was allowing unapproved Canadian pharmacies to advertise on their search engine and target US consumers. Because of heightened concern to protect consumers, Google agreed to ban non-NABP-certified pharmacies from their sponsored search listings in February 2010 and settled with the DOJ in August 2011. We study how the ban on non-NABP-certified pharmacies from sponsored search listings affects consumer search on the Internet. Using click-through data from comScore, we find that non-NABP-certified pharmacies receive fewer clicks after the ban, and this effect is heterogeneous. In particular, pharmacies not certified by the NABP, but certified by other sources (other-certified sites), experience a reduction in total clicks, and some of their lost paid clicks are replaced by organic clicks. These effects do not change significantly after the DOJ settlement. In contrast, pharmacies not certified by any of the four major certification agencies suffer a greater reduction in both paid and organic clicks, and the reduction was exacerbated after the DOJ settlement. These results suggest that the ban has increased the search cost for other-certified sites, but at least some consumers overcome the search cost by switching from paid to organic links. In addition to search cost, the ban may have increased concerns for uncertified sites and discouraged consumers from reaching them via both paid and organic links.
    JEL: D83 I18 K32 L81
    Date: 2014–05
  9. By: Schudy, Simeon; Utikal, Verena
    Abstract: We provide evidence that people have preferences for data privacy and show that these preferences partly reflect people’s interest in controlling who receives their private information. Participants of an experiment face the decision to share validated personal information with peers. We compare preferences for sharing potentially embarrassing information (body weight and height) and non-embarrassing information (address data) with geographically proximate or distant peers. We find that i) participants are willing to give up substantial monetary amounts in order to keep both types of information private, ii) data types are valued differently, and iii) prices for potentially embarrassing information tend to be higher for geographically proximate than distant peers.
    Keywords: preferences; data privacy; information transmission; experiment
    JEL: C91 D80 D82
    Date: 2014–05

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