nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2016‒09‒11
six papers chosen by
Walter Frisch
Universität Wien

  1. Exhaustion of Digital Goods: An Economic Perspective By Wolfgang Kerber
  2. Valuing "Free" Media in GDP: An Experimental Approach By Nakamura, Leonard I.; Samuels, Jon; Soloveichik, Rachel
  3. Perspective of Croatian tourism supported with ICT potential and ICT trends By Daniela Garbin Praničević; Ana Zovko
  4. Low Latency Internet and Economic Growth: A Simultaneous Approach By Jochen Lüdering
  5. The Impact of R&D and ICT Investment on Innovation and Productivity in Chilean Firms By Roberto Álvarez
  6. Does Online Search Predict Sales? Evidence from Big Data for Car Markets in Germany and the UK By Georg von Graevenitz; Christian Helmers; Valentine Millot; Oliver Turnbull

  1. By: Wolfgang Kerber (University of Marburg)
    Abstract: The "UsedSoft" decision of the Court of Justice of the European Union (CJEU) about the right of a buyer of a downloaded copy of a software to resell this copy triggered a controversial discussion about the applicability of the "exhaustion" rule (US: first-sale doctrine) to copyright-protected digital goods (as, e.g., also e-books). This paper offers, in a first step, a systematic analysis and assessment of economic reasonings that have been discussed in the literature about exhaustion, and applies this framework, in a second step, to downloaded digital creative works. An important result is that digitalisation, on one hand, changes considerably the benefits and costs of exhaustion, esp. in regard to the danger of jeopardizing the incentives for copyright owners. On the other hand, however, also the costs of imposing restrictions might be high and even increase in a digital economy. This leads to the conclusion that it is necessary to think seriously about the legal limits for the restrictions that copyright owners should be allowed to impose on their customers. However, these limits might be drawn also by other legal instruments than copyright exhaustion.
    Keywords: Digital goods, copyright exhaustion, first-sale doctrine, post-sale restrictions
    JEL: K20 L86 O34
    Date: 2016
  2. By: Nakamura, Leonard I. (Federal Reserve Bank of Philadelphia); Samuels, Jon (U.S. Bureau of Economic Analysis); Soloveichik, Rachel (U.S. Bureau of Economic Analysis)
    Abstract: “Free” consumer entertainment and information from the Internet, largely supported by advertising revenues, has had a major impact on consumer behavior. Some economists believe that measured gross domestic product (GDP) growth is badly underestimated because GDP excludes online entertainment (Brynjolfsson and Oh 2012; Ito 2013; Aeppel 2015). This paper ntroduces an experimental GDP methodology that includes advertising-supported media in both final output and business inputs. For example, Google Maps would be counted as final output when it is used by a consumer to plan vacation driving routes. On the other hand, the same website would be counted as a business input when it is used by a pizza restaurant to plan delivery routes. Contrary to critics of the U.S. Bureau of Economic Analysis (BEA), the process of including “free” media in the input-output accounts has little impact on either GDP or total factor productivity (TFP). Between 1998 and 2012, measured nominal GDP growth falls 0.005% per year, real GDP growth rises 0.009% per year and TFP growth rises 0.016% per year. Between 1929 and 1998, measured nominal GDP growth rises 0.002% per year, real GDP growth falls 0.002% per year, and TFP growth rises 0.004% per year. These changes are not nearly enough to reverse the recent slowdown in growth. Our method for accounting for free media is production oriented in the sense that it is a measure of the resource input into the entertainment (or other content) of the medium rather than a measure of the consumer surplus arising from the content. The BEA uses a similar productionoriented approach when measuring GDP. In contrast, other researchers use broader approaches to measure value. Brynjolfsson and Oh (2012) attempt to capture some consumer surplus by measuring the time expended on the Internet. Varian (2009) argues that much of the value of the Internet is in time saving, an additional metric for capturing consumer surplus. The McKinsey Institute (Bughin et al. 2011) attempts to measure the productivity gain from search directly. In particular, this production-oriented accounting has no method to account for instances in which the good or service precedes the revenue that it eventually generates. Over the past two decades, many Silicon Valley firms have followed the disruptive business model described as URL: ubiquity now, revenue later. Some firms have been creating proprietary software or research, which is already captured in the national accounts as investment. Other firms have been creating intangible investments in open source software, customer networks and other organizational capital. Despite their long-run value, none of these intangible assets are currently captured in the national accounts as investment. If we treat these asset categories as capital, then the productivity boom from 1995 to 2000 becomes even stronger and the weak productivity growth of the past decade may be ameliorated somewhat.
    Keywords: Internet; Productivity; Advertising; Measurement; GDP
    JEL: C82 L81 M37 O3
    Date: 2016–08–05
  3. By: Daniela Garbin Praničević (Faculty of Economics, Department of Business Informatics, Split, University of Split, Croatia); Ana Zovko (Adriatic Sailing Ltd, Zagreb, Croatia)
    Abstract: Purpose – Despite the fact that information and communication technology (ICT) provide innovative and advanced potential to significantly increase the competitiveness of tourism goods and services it is still insufficiently recognized and accordingly not enough used. On the other side, the ICT potential, if ignored, may results with serious consequences for the quality of tourism processes on supply side and demand side as well. The main aim of the paper is, therefore, to explore ICT potential in wider context and propose modalities how to apply it better and more professional locally, namely in Croatian tourism sector. Methodology – Qualitative methods of analyses and desktop research were used in the study. Findings – The authors outlined state of art trends in tourism induced by ICT and enclose example and case studies of some customized ICT solutions to tourism needs. Those results strongly emphasize the necessity of constantly following mentioned trends in tourism practice. Contribution – Contributions are considered from three standpoints: firstly from the theoretical view the contribution is related on justification of ICT as main driver of innovation in tourism. Secondly, developing the framework appropriate for investigating the ICT potential requisite to increase competitiveness contribute within research part. Finally, proposing the basic guidelines to tourism management for improving the use if ICT potential present a practical implication of this qualitative review.
    Keywords: ICT innovative potential, ICT trends, ICT implementation, Croatia
    JEL: L83
    Date: 2016–04
  4. By: Jochen Lüdering (University of Giessen)
    Abstract: Given the quality of the available data on Internet access across several countries, it is necessary to evaluate alternative measures to assess the effect of Internet access on economic outcomes. The research at hand builds up on an earlier paper, which introduced a novel measure of Internet quality. A logical consequence has been to introduce the new indicator (average latency for a country) into established models of economic growth. The data used in this analysis spans the period from 2008 to 2014 and covers 155 countries. The findings largely confirm previous results, that Internet access is beneficial to economic growth and emphasize the appropriateness of technical measures of Internet quality for economic analysis. Apart from providing insight into the quality dimension these measures do not rely on survey data, but can be obtained directly requiring only a low level of investment, making the data collection process viable even for smaller institutions.
    Keywords: Economic Growth, Simultaneous Equations, Internet, Latency
    JEL: O47 O57 L96
    Date: 2016
  5. By: Roberto Álvarez
    Abstract: This paper examines the impact of information and communication technology (ICT) and research and development (R&D) investment on innovation and productivity in Chilean firms, in particular those in the services industry. It provides new evidence on this topic for a developing country and also for firms in the services sector, areas in which existing evidence is limited. The findings for services industries are relevant because this sector in Latin America has a large productivity gap when compared to the sector in developed countries. The results show that ICT contributes positively to innovation and productivity in both the total sample and the services industry. They also confirm that ICT investment increases productivity directly and not only through innovation, suggesting that this investment would have additional effects on productivity.
    Date: 2016–09
  6. By: Georg von Graevenitz; Christian Helmers; Valentine Millot; Oliver Turnbull
    Abstract: We use online search data to predict car sales in the German and UK automobile industries. Search data subsume several distinct search motives, which are not separately observable. We develop a model linking search motives to observable search data and sales. The model shows that predictions of sales relying on observable search data as a proxy for prepurchase search will be biased. We show how to remove the biases and estimate the effect of pre-purchase search on sales. To assist identification of this effect, we use the introduction of scrappage subsidies for cars in 2008/2009 as a quasi-natural experiment. We also show that online search data are (i) highly persistent over time, (ii) potentially subject to permanent shocks, and (iii) correlated across products, but to different extent. We address these challenges to estimation and inference by using recent econometric methods for large N, large T panels.
    Keywords: Online search, Google Trends, Serial correlation, Non-stationarity, Common Correlated Effects, Large Panels
    JEL: D
    Date: 2016–08

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