nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2016‒10‒30
four papers chosen by
Walter Frisch
Universität Wien

  1. Strategic Technology Adoption and Entry Deterrence in the US Local Broadband Markets By Tedi Skiti
  2. Social Network Sites, Individual Social Capital and Happiness By Efstratia Arampatzi; Martijn J. Burger; Natallia A. Novik
  3. The Next Phase in the Digital Revolution: Platforms, Abundant Computing, Growth and Employment By Zysman, John; Kenney, Martin
  4. Strategic grouping and search for quality journalism, online versus offline By Matthew Ellman; Tomás Rodríguez Barraquer

  1. By: Tedi Skiti (Department of Economics, Duke University)
    Abstract: How does strategic investment affect entry of new technologies and market structure? This article investigates the role of competition in firms’ technology adoption decisions in the U.S. wireline broadband industry. I present a model of strategic entry deterrence and study how internet service providers’ interactions affect their technology deployment at local markets. The goal is to capture an important trade-off: cable firms adopt a new cable system to provide higher speeds, but the adoption has a preemptive effect on fiber firms’ entry. I collect and combine unique firm-level data on broadband technology deployment and markets under entry threat for New York State. I provide evidence of strategic investment by cable incumbents to deter fiber entry. Counterfactual scenarios suggest that the industry has experienced 16% excessive investment in cable adoption and 12% underinvestment in fiber entry both of which are explained by these deterrence strategies. In addition, subsidies to cable incumbents in small markets reduce fiber entry rate by 50%. I also find that policies that promote statewide entry mitigate the effects from these deterrence strategies and increase fiber entry rate by 30%. These results have wide implications for technology diffusion, quality provision and optimal subsidy policy in markets with strategic technology adoption and entry threat.
    Keywords: Broadband, Strategic Investment, Technology Adoption, Entry Threat, Deterrence
    JEL: L13 L41 L96
    Date: 2016–09
  2. By: Efstratia Arampatzi (Erasmus University Rotterdam, The Netherlands); Martijn J. Burger (Erasmus University Rotterdam, The Netherlands); Natallia A. Novik (Université de Strasbourg, France; Erasmus University Rotterdam, The Netherlands)
    Abstract: Can online social contacts replace the importance of real-life social connections in our pursuit of happiness? With the growing use of social network sites (SNSs), attention has been increasingly drawn to this topic. Our study empirically examines the effect of SNS use on happiness for different subgroups of young adults. More specifically, we examine whether the effect of SNSs on happiness is moderated by individual social capital, as measured in terms of frequency of social contacts and feelings of loneliness. Using Dutch data from the Longitudinal Internet Studies for the Social Sciences (LISS panel), we provide robust empirical evidence that there is, on average, no relationship between the amount of time spent on SNSs and happiness. However, we find a negative association between the numbers of hours spent on SNS and happiness for SNS users who feel socially disconnected and lonely. The results hold when we control for socio-demographic characteristics, trust, hours spent on other Internet sites and household income. Hence, SNSs are not a substitute for real-life social connections and, at most, complement them.
    Keywords: Subjective well-being; happiness; social network sites; individual social capital; social isolation; loneliness
    JEL: I31 L86 Z13
    Date: 2016–10–17
  3. By: Zysman, John; Kenney, Martin
    Abstract: This report argues that computer-intensive automation (CIAutomation) is likely to change the nature of work and manufacturing value creation in the emerging Platform Economy. The industrial and service changes based on low-cost computation, as they become more generalized, may reverse Robert Gordon’s observations about the slowing growth in productivity. However, the increased adoption of CIAutomation also poses profound dilemmas for society that revolve around whether this automation will be used to solely to replace workers or can be integrated into production of goods and services in ways that augment human capacities and intelligence. Finally, we speculate upon the role of the state in in governing and shaping the emergence of the Platform Economy.
    Keywords: Platforms, automation, gig economy, governance, public policy
    JEL: D78 L86 O33
    Date: 2016–10–17
  4. By: Matthew Ellman (IAE-CSIC, BGSE); Tomás Rodríguez Barraquer (MOVE-UAB, BGSE)
    Abstract: This paper investigates how supply-side factors influence the search for quality content in online and offline environments. We show that lower fixed costs of online publishing reduce the incentives to bundle content, as compared to offline journalism. In the presence of asymmetric information over journalistic quality, bundling of content by journalists who publish as a group generates positive informational externalities for users. Journalists group assortatively, better journalists having better partners. Then a consumer who discovers one quality journalist, has found several. The online environment, by reducing the pressure to group up, can lower welfare in our baseline model. We establish conditions for this result and investigate a number of countervailing forces.
    Keywords: Media economics, quality, search, links, matching
    JEL: L13 L82
    Date: 2016–10

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