nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2015‒10‒17
nine papers chosen by
Walter Frisch
Universität Wien

  1. A Replicator Dynamic and Simulation Analysis of Network Externalities and Compatibility Among Standards By Heinrich, Torsten
  2. ICT and Education: Evidence from Student Home Addresses By Benjamin Faber; Rosa Sanchis-Guarner; Felix Weinhardt
  3. Digital Social Visibility, Anonymity and User Content Generation: Evidence from Natural Experiments By Ni Huang; Yili Hong; Gordon Burtch
  4. The Economics of Universal Service: an Analysis of Entry Subsidies for Rural Broadband By Andre Boik
  5. Industrial Agglomeration and Use of the Internet By Chang, C-L.; McAleer, M.J.; Wu, Y-C.
  6. Motivating IT-Mediated Crowds: The Effect of Goal Setting on Project Performance in Online Crowdfunding By Zhuoxin Li; Sirkka L. Jarvenpaa
  7. When Online Engagement Gets in the Way of Offline Sales - A Natural Experiment By Sagit Bar-Gill; Shachar Reichman
  8. The Value of ICT Platform Investments within Distributed Energy Systems By Garnier, Ernesto; Madlener, Reinhard
  9. Impact of E-Commerce on Organization Performance; Evidence from Banking Sector of Pakistan By Azeem, Muhammad Mehtab; Ozari, Assit.Prof. Dr.Cidgem; Marsap, Prof.Dr.Akin; Arhab, Prof. Dr.Said; Jilani, Abdul Haseeb

  1. By: Heinrich, Torsten
    Abstract: In the presence of network externalities, compatibility and tying or bundling of standards may be employed as strategic tools. This has reportedly been done by, e.g., many competitors in ICT industries. It remains, however, less clear which mechanisms exactly are exploited and in what way. The present paper investigates the economic role of compatibility or incompatibility of tied standards for the dynamics of competition between standards. A replicator model operating on an aggregated level is complemented by an agent-based simulation that takes into account the network structure among users and by an empirical example from the information technology sector. A variety of effects and strategic options of vendors of the standards are studied, including the role of initial usage share distribution, controlling the inter-subsectoral compatibility, setting up new competitors, and utilizing properties of the network such as central or peripheral positioning of agents (Feld's friendship paradox). The agent-based model contrasts a complete network and a regular ring network with asymmetric network structures derived from Barabàsi and Albert's preferential attachment mechanism and triadic closure. Though this explores only a small subset of the theoretically possible effects, it may contribute to a better understanding of strategic interaction in the presence of network externalities.
    Keywords: network externalities \and platform competition \and standard tying; information and communication technology; agent-based modeling; replicator dynamics; preferential attachment networks
    JEL: C61 C63 D43 L81 L86 L96
    Date: 2015–10–12
  2. By: Benjamin Faber; Rosa Sanchis-Guarner; Felix Weinhardt
    Abstract: Governments are making it a priority to upgrade information and communication technologies (ICT) with the aim to increase available internet connection speeds. This paper presents a new empirical strategy to estimate the causal effects of these policies, and applies it to the questions of whether and how ICT upgrades affect educational attainment. We draw on a rich collection of microdata that allows us to link administrative test score records for the population of English primary and secondary school students to the available ICT at their home addresses. To base estimations on exogenous variation in ICT, we notice that the boundaries of usually invisible telephone exchange station catchment areas give rise to substantial and essentially randomly placed jumps in the available ICT across neighboring residences. Using this design across more than 20,000 boundaries in England, we find that even very large changes in available broadband connection speeds have a precisely estimated zero effect on educational attainment. Guided by a simple model we then bring to bear additional microdata on student time and internet use to quantify the potentially opposing mechanisms underlying the zero reduced form effect. While jumps in the available ICT appear to increase student consumption of online content, we find no significant effects on student time spent studying online or offline, or on their learning productivity.
    Keywords: Education, information and communication technology, internet
    JEL: I20 D83
    Date: 2015–10
  3. By: Ni Huang (Temple University, Fox School of Business, 1801 Liacouras Walk, Philadelphia, PA 19122); Yili Hong (Arizona State University, W. P. Carey School of Business, 400 E Lemon St, Tempe, AZ 85287); Gordon Burtch (University of Minnesota, Carlson School of Management, 321 19th Ave. S., Room 3-368, Minneapolis, MN, 55455)
    Abstract: This study examines how changes in digital social visibility (or conversely, anonymity) can affect the characteristics of user-generated content (volume and linguistic features). We consider natural experiments at two leading online review websites ( and, wherein each was integrated with Facebook. Constructing a unique panel dataset of online reviews for a matched set of restaurants across the two review sites, we estimate a multi-treatment difference-in-differences (DID) model to assess the impact of increased digital social visibility (decreased anonymity). We find that integration with Facebook (and thus greater digital social visibility) increased the volume of user-generated content and consumers’ use of affective language processes, while simultaneously decreasing their use of cognitive language processes and controversial language (e.g., sexually explicit, negative and abrasive words). We discuss the implication of these results as they relate to the creation of a civil, sustainable online social platforms for user generated content.
    Keywords: Natural experiment, text analytics, online reviews, linguistic characteristics, digital social visibility, social network integration, anonymity, difference-in-differences
    JEL: D12 D80
    Date: 2015–10
  4. By: Andre Boik (Department of Economics, University of California (Davis), One Shields Avenue, Davis CA, 95616)
    Abstract: Universal service is a policy objective that all individuals or households have access to some service. Subsidy policies to accomplish universal service may arise when private provision is non-universal. In the context of rural high speed wired broadband subsidies, this paper exploits household-level cable and satellite broadband subscription data from North Carolina to examine household adoption and substitution patterns and to evaluate how many currently unserved regions warrant an entry subsidy. This paper has three main findings: (i) fewer than 47% of households adopt high speed broadband in areas currently served by a single broadband provider, (ii) there exists a significant elasticity of substitution between high speed wired broadband and the lower speed options of satellite broadband and DSL, and (iii) a generous upper bound on the number of regions that warrant an entry subsidy is 67%. These results suggest a policy of universal service in North Carolina would be unlikely to achieve universal adoption, would connect many households already with internet access and who would not substitute, and in many regions would be prohibitively costly even assuming very generous estimates of the consumer surplus generated. From the perspective of social welfare, to connect the 5% least dense areas of North Carolina would require each adopting household value broadband access at more than $1550 per month.
    Keywords: Universal service; entry subsidies; broadband; telecommunications
    JEL: L96 L97 L51 H71
    Date: 2015–09
  5. By: Chang, C-L.; McAleer, M.J.; Wu, Y-C.
    Abstract: Taiwan has been hailed as a world leader in the development of global innovation and industrial clusters for the past decade. This paper investigates the effects of industrial agglomeration on the use of the internet and internet intensity for Taiwan manufacturing firms, and analyses whether the relationships between industrial agglomeration and total expenditure on internet usage for industries are substitutes or complements. The sample observations are based on 153,081 manufacturing plants, and covers 26 2-digit industry categories and 358 geographical townships in Taiwan. The Heckman selection model is used to adjust for sample selectivity for unobservable data for firms that use the internet. The empirical results from two-stage estimation show that: (1) for the industry overall, a higher degree of industrial agglomeration will not affect the probability that firms will use the internet, but will affect the total expenditure on internet usage; and (2) for 2-digit industries, industrial agglomeration generally decreases the total expenditure on internet usage, which suggests that industrial agglomeration and total expenditure on internet usage are substitutes.
    Keywords: industrial agglomeration and clusters, global innovation, internet penetration, manufacturing firms, sample selection, incidental truncation
    JEL: D2 L60
    Date: 2015–08–01
  6. By: Zhuoxin Li (Carroll School of Management, Boston College, 140 Commonwealth Ave, Chestnut Hill, MA 02467); Sirkka L. Jarvenpaa (McCombs School of Business, The University of Texas at Austin, 2110 Speedway Stop B6500, Austin, TX, 78712)
    Abstract: In traditional organizations, stretch goals - difficult and seemingly unattainable goals - have been much debated for their paradoxical effects. Recently, their use as a managerial instrument in IT-mediated crowds has increased. Using online crowdfunding on Kickstarter as an example, we investigate how the use of stretch goals influences project performance. Empirical results show that the use of stretch goals is associated with better project funding performance. Such positive effect is even stronger for projects with higher levels of community engagement. However, stretch goals are less effective in project categories where stretch goals are less novel. Our empirical results also reveal that the use of stretch goals significantly increases a project’s likelihood of delivery delay. These results shed light on the potential dark side of using stretch goals in IT-mediated crowds.
    Keywords: goal setting; stretch goals; IT-mediated crowds; motivation; crowdfunding; online community; engagement
    JEL: D12 C81 L26 L86
    Date: 2015–09
  7. By: Sagit Bar-Gill (MIT Sloan School of Management, 77 Massachusetts Ave, Cambridge, MA 02139); Shachar Reichman (MIT Sloan School of Management, 77 Massachusetts Ave, Cambridge, MA 02139, and Tel Aviv University, Tel Aviv, 69978, ISRAEL)
    Abstract: The paper studies the effect of online engagement on a brand’s website on offline sales, for a product not available via the online channel. We propose a modelling framework for the online-to-offline funnel, and study the effect of online engagement on purchase decisions. The model highlights both substitution and complementarity between online and offline engagement and sales. We then exploit a natural experiment setting to study the effect of the introduction of a new interactive website by a leading automobile brand on dealership contact and sales. We find evidence for substitution between online and offline engagement, as offline engagement and sales declined following launch of the new website
    Keywords: Online-to-offline, online engagement, natural experiment, sales funnel
    JEL: M31 L19
    Date: 2015–09
  8. By: Garnier, Ernesto (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper dissects the ways in which policy regime uncertainty influences decisions over innovative energy technology investments. We apply compound real options methodology to evaluate the investment in a virtual power plant (including an information and communication technology platform) in view of volatile market prices and an uncertain future market design. The analysis reveals two separable effects of policy regime uncertainty: a policy process effect and a policy content effect. The former refers to investment delays caused by uncertainty about the probability and speed of change. The latter refers to changes in investment valuation and timing due to the anticipated impact of policy amendments on wholesale market dynamics. The implication is that policymakers may stimulate investments by merely increasing transparency and predictability of policy and regulatory change. In turn, even well-designed policy regimes may have adverse effects on investment activity if improperly introduced.
    Keywords: Policy uncertainty; Virtual power plant; Distributed energy; Real options
    JEL: G11 Q42 Q48
    Date: 2015–03
  9. By: Azeem, Muhammad Mehtab; Ozari, Assit.Prof. Dr.Cidgem; Marsap, Prof.Dr.Akin; Arhab, Prof. Dr.Said; Jilani, Abdul Haseeb
    Abstract: In the recent years, E-banking is one of the most important revolutions in the banking sector of Pakistan. This study measures the impact of e commerce (B2B, B2C, C2C) on organization performance (Business operation, Job performance, Customer satisfaction).The sample of this research is collected from the banking sector of Pakistan from the period of 6 to 8 months by using 50 samples filling online from the period 2012 to 2013. Results show that there is positive relationship between e-commerce and organization performance and by implementing e commerce; organizations improve its performance in terms of business operations, job performance and customer satisfaction. Major research has been withdrawn from MBA thesis subject Impact of foreign banks on domestic banks businesses.
    Keywords: Electronic commerce, organization performance, business to business, business to customer, customer to customer.
    JEL: E5
    Date: 2015–06

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