nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2014‒12‒29
eleven papers chosen by
Walter Frisch
Universität Wien

  1. ICTs? Spatial Diffusion Waves By Anastasia Nagirnaya
  2. Perceived benefits and barriers to the use of high-speed broadband in Ireland’s second-level schools By Devitt, Niamh; Lyons, Sean; McCoy, Selina
  3. Mapping Information Economy Businesses with Big Data: Findings for the UK By Max Nathan; Anna Rosso
  4. On the information and communication technologies - productivity nexus: a long-lasting adjustment period By Benjamin David
  5. The Economic Impact of Digital Structural Reforms By Dimitri Lorenzani; Janos Varga
  6. Consumer Search Costs and Preferences on the Internet By Jolivet, Grégory; Turon, Hélène
  7. Consumer Price Search and Platform Design in Internet Commerce By Michael Dinerstein; Liran Einav; Jonathan Levin; Neel Sundaresan
  8. The Role of Card Acceptance in the Transaction Demand for Money By Huynh, Kim P.; Schmidt-Dengler, Philipp; Stix, Helmut
  9. What shapes eHealth literacy of an individual? By Xesfingi, Sofia; Vozikis, Athanasios
  10. Reassessing competition concerns in electronic communications markets By Peitz, Martin; Valletti, Tommaso
  11. The impact of piracy on prominent and non-prominent software developers By Rasch, Alexander; Wenzel, Tobias

  1. By: Anastasia Nagirnaya
    Abstract: Spatial diffusion of information and communication technologies (ICTs) is a global continuous accumulative process. But is it uniform or cyclic? Is it possible to skip some of its historical stages? What is a specific feature of the modern stage? Are there any patterns of ICTs interaction? And how do different ICT innovations work on globalization? Based on official statistics on ICTs penetration and traffic (print press, postal service, telegraph, telephone, radio, television, mobile phone, Internet) received from governments (including USA and Russia) and international organizations (ITU, UN, etc.) covering the period of the latest 20--150 years, graphs and maps have been generated and the following results have been obtained. The study has shown that ICTs diffusion is wave-like in the long term. As a rule, new innovation waves accelerate a decline of the old ones. But in some cases, when waves of different ICT generations overlap, a "resonance effect" appears caused by the inertness of ICT infrastructure. Detailed analysis of mobile telephony diffusion in correlation with fixed telephony and Internet revealed a fact that advanced ICTs development can make it possible for developing regions to skip certain stages of informatization and even implement an "overcoming" scenario of catching-up development. Specific feature of the modern stage is ICTs convergence: an integrated universal system of global digital communications is being developed on the Internet basis. It is an outcome of the modern globalization age, just as telegraph formed the 1st global information network in early globalization epoch. According to our research of different ICTs' traffic structure, each next generation of ICT innovations provides more international communicative openness (defined by a share of international traffic in a total traffic volume). In the modern world only 4% of the global telephone traffic is international, just 1% of the traditional postal mail crosses international borders. Another trend has been discovered for the Internet traffic, 46% of which is international, and this share is growing rapidly. Thus, when moving from traditional to the newest ICTs, a spatial scale of communication grows from mostly local to international, and international traffic is constantly migrating from traditional to the newest telecommunications. This study expands the understanding of ICTs diffusion process, presenting it in a long term and in an integrated manner, and its results could be important for informatization policies and strategies elaboration.
    Keywords: innovations diffusion; information and communication technologies; telecommunications
    Date: 2014–11
  2. By: Devitt, Niamh; Lyons, Sean; McCoy, Selina
    Abstract: As part of Ireland’s National Digital Strategy high-speed broadband is being rolled-out to all second-level schools to support greater use of ICT in education. This programme signals a move from slow and unreliable broadband connection for many schools to a guaranteed high-speed connection with technical support. Theoretically, this should allow for behaviours and pedagogies to adapt incorporating ICT into education. Research shows that integrating ICT into teaching and learning is a gradual process for most teachers and is influenced by a complex mix of socio-technical factors. Our dataset consists of survey data from teachers and principals from a sample of second-level schools. The survey collected factual and attitudinal variables including attitudes towards ICT integration, current availability of infrastructure and barriers to ICT use, before schools received high-speed broadband connectivity. We examine the factors influencing teachers’ attitudes to ICT and their perceived barriers in adopting new technologies in their day-to-day teaching. Analysis of this baseline period is essential in an iterative digital strategy, informing future strategies, targeting policy most effectively and achieving policy objectives. While attitudes towards the potential of high-speed broadband and use of ICT are consistently positive across sub-groups of schools and teachers, perceived barriers to ICT usage differ.
    Keywords: high-speed broadband, ICT barriers, second-level education, student learning, ICT integration
    JEL: H52 I21 L96
    Date: 2014–12–03
  3. By: Max Nathan; Anna Rosso
    Abstract: Governments around the world want to develop their ICT and digital industries. Policymakers thus need a clear sense of the size and characteristics of digital businesses, but this is hard to do with conventional datasets and industry codes. This paper uses innovative 'big data' resources to perform an alternative analysis at company level, focusing on ICT-producing firms in the UK (which the UK government refers to as the 'information economy'). Exploiting a combination of public, observed and modelled variables, we develop a novel 'sector-product' approach and use text mining to provide further detail on the activities of key sector-product cells. On our preferred estimates, we find that counts of information economy firms are 42% larger than SIC-based estimates, with at least 70,000 more companies. We also find ICT employment shares over double the conventional estimates, although this result is more speculative. Our findings are robust to various scope, selection and sample construction challenges. We use our experiences to reflect on the broader pros and cons of frontier data use.
    Keywords: Quantitative methods, firm-level analysis, Big Data, text mining, ICTs, digital economy, industrial policy
    JEL: C81 L63 L86 O38
    Date: 2014–12
  4. By: Benjamin David
    Abstract: This paper investigates the relationship between Information and Communication Technologies (ICT) and productivity within 240 industries from 8 OECD countries. Specifically, it aims at providing explanations for the coexistence of this strong technological evolution together with the absence of break in the productivity trend during the last decades. We calculate the total factor productivity changes and their components (technical progress and pure efficiency changes) over the period 1973-2005 using the Malmquist productivity index and we then relate these measures with data on ICT diffusion using regression trees. Our results suggest that ICT diffusion is accompanied by opposite movements that conceal the potential of these technologies. Indeed, we find evidence of a clearly identifiable positive relationship between computerization and technical progress, while ICT diffusion negatively affects pure efficiency changes. Our findings support the existence of an adjustment period and are consistent with the fact that the economies under consideration are still in a phase of adaptation.
    Keywords: Information and Communication Technologies, General Purpose Technologies, Malmquist productivity index, Data envelopment analysis, regression tree.
    JEL: C14 D24 O33
    Date: 2014
  5. By: Dimitri Lorenzani; Janos Varga
    Abstract: This work aims to contribute to the policy debate on how to spur "digital growth" in Europe in the context of the crisis, by assessing the potential economic impact of structural reforms efforts either already undertaken or imminently foreseen in the field of European digital markets. Namely, this is done by analysing the growth effect of European reforms in the areas of radio spectrum, professional e-skills, eCommerce, and fixed broadband take-up. Each policy area is analysed separately, in the first place by hypothesizing and econometrically testing specific “transmission channels”, i.e. the direct impact of selected reform variables on intermediate economic outcomes, such as prices and productivity. In the second place, the price and productivity shocks estimated on the basis of the actually observed change in the reform variable (as a proxy for the countries’ reform effort) are fed into QUEST III to simulate macroeconomic impacts on GDP. Despite their heterogeneity, the importance of analysing these reforms together lies in the possibility of shedding light on the overall economic impact of fostering specific aspects of the Digital Single Market in the EU. Indeed, summing up the simulated macroeconomic impacts for different policy areas shows that the long-run growth impact of the already observed digital reform effort is above 1%, and that further efforts in line with the Digital Agenda for Europe targets would entail additional 2.1% of GDP growth over the baseline. From a methodological point of view, the findings highlight the importance to test the adequate functioning of the microeconomic transmission channels through which digital structural reforms could exert their overall macroeconomic impact.
    JEL: C33 E17 F15 L51 L96
    Date: 2014–09
  6. By: Jolivet, Grégory (University of Bristol); Turon, Hélène (University of Bristol)
    Abstract: We analyse consumers' search and purchase decisions on an Internet platform. Using a rich dataset on all adverts posted and transactions made on a major French Internet platform (PriceMinister), we show evidence of substantial price dispersion among adverts for the same product. We also show that consumers do not necessarily choose the cheapest advert available and sometimes even choose an advert that is dominated in price and non-price characteristics (such as seller's reputation) by another available advert. To explain the transactions observed on the platform, we derive and estimate a structural model of sequential directed search where consumers observe all advert prices but have to pay a search cost to see the other advert characteristics. We allow for flexible heterogeneity in consumers' preferences and search costs. After deriving tractable identification conditions for our model, we estimate sets of parameters that can rationalize each transaction. Our model can predict a wide range of consumer search strategies and fits almost all transactions observed in our sample. We find empirical evidence of heterogenous, sometimes positive and substantially large search costs and marginal willingness to pay for advert hedonic characteristics.
    Keywords: consumer search, revealed preferences, individual heterogeneity, price dispersion, internet
    JEL: C13 D12 D81 D83 L13
    Date: 2014–11
  7. By: Michael Dinerstein (Stanford University); Liran Einav (Stanford University); Jonathan Levin (Stanford University); Neel Sundaresan (eBay Inc)
    Abstract: Search frictions can explain why the "law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low, yet price dispersion is common. We use browsing data from eBay to estimate a model of consumer search and price competition when retailers offer homogeneous goods. We find that retail margins are on the order of 10%, and use the model to analyze the design of search rankings. Our model explains most of the effects of a major re-design of eBay's product search, and allows us to identify conditions where narrowing consumer choice sets can be pro-competitive. Finally, we examine a subsequent A/B experiment run by eBay that illustrates the greater difficulties in designing search algorithms for differentiated products, where price is only one of the relevant product attributes.
    Date: 2014–08
  8. By: Huynh, Kim P.; Schmidt-Dengler, Philipp; Stix, Helmut
    Abstract: The use of payment cards, either debit or credit, is becoming more and more widespread in developed economies. Nevertheless, the use of cash remains significant. We hypothesize that the lack of card acceptance at the point of sale is a key reason why cash continues to play an important role. We formulate a simple inventory model that predicts that the level of cash demand falls with an increase in card acceptance. We use detailed payment diary data from Austrian and Canadian consumers to test this model while accounting for the endogeneity of acceptance. Our results confirm that card acceptance exerts a substantial impact on the demand for cash. The estimate of the consumption elasticity (0.23 and 0.11 for Austria and Canada, respectively) is smaller than that predicted by the classic Baumol-Tobin inventory model (0.5). We conduct counterfactual experiments and quantify the effect of increased card acceptance on the demand for cash. Acceptance reduces the level of cash demand as well as its consumption elasticity.
    Keywords: counterfactual distributions; endogenous switching regression; inventory models of money
    JEL: C35 C83 E41
    Date: 2014–10
  9. By: Xesfingi, Sofia; Vozikis, Athanasios
    Abstract: This paper studies the ability of an individual in searching, analyzing and processing information from the Internet in order to address or solve health related issues, the so-called eHealth literacy and the factors that shape it. Understanding what influences eHealth in a country is particularly relevant for health markets as it provides guidelines for health marketers to develop targeted and tailored communication materials for relevant consumer segments, and further could suggest appropriate strategies for training the health illiterate part of the population. Using a unique sample based on survey data of 1064 individuals in Greece for the year 2013, we find that among demographic factors, age and education strongly affect the eHealth literacy and physical exercise among the life-style variables. Finally, other types of technology literacies such as computer skills and information obtained from the Internet further enhance the eHealth performance of an individual and have the greatest impact among all factors.
    Keywords: eHealth literacy, demographic factors, life-style factors, technology literacy, Internet
    JEL: C25 C83 I12
    Date: 2014–11–25
  10. By: Peitz, Martin; Valletti, Tommaso
    Abstract: Central features of today's electronic communications markets are complementarities between the different layers of the value chain, substitutability between some applications, network effects in the provision of content and services, two-sided business models that partly involve indirect revenue generation (such as advertising and data profiling), and a patchwork of regulated and unregulated segments of the market. This complexity requires a fresh look at the market forces shaping the industry and a rethinking of market definitions and of the assessment of market power. This article presents the state of play in European electronic communication markets, with a particular emphasis on the recent development of 'over the tops'. We also use a stylised model of an electronic communications market to draw some central lessons from economic theory and to elaborate on market definition and market power.
    Keywords: telecommunications,OTT,relevant market,two-sided markets,market power
    JEL: D82 L13 L41 L51 L86 L96
    Date: 2014
  11. By: Rasch, Alexander; Wenzel, Tobias
    Abstract: This paper studies the impact of software piracy on prominent and non-prominent software developers in markets based on a two-sided platform business. Consumer behavior is imperfect and, when adopting a platform, consumers only take prominent software into account. We show that prominent software exhibits higher piracy rates than non-prominent software. However, contrary to intuition, this does not necessarily mean that prominent software developers benefit more from increased software protection. Indeed, we show that prominent developers may lose out whereas non-prominent developers may gain from better software protection.
    Keywords: Piracy,Platform,Software,Two-sided market
    JEL: L11 L86
    Date: 2014

This nep-ict issue is ©2014 by Walter Frisch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.