nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2017‒11‒26
three papers chosen by
Walter Frisch
Universität Wien

  1. Speed 2.0: evaluating access to universal digital highways By Ahlfeldt, Gabriel M.; Koutroumpis, Pantelis; Valletti, Tommaso
  2. Excess reciprocity distorts reputation in online social networks By Livan, Giacomo; Caccioli, Fabio; Aste, Tomaso
  3. Fast Internet, digital vulnerabilities and firm performances in developing and transition countries By Joël CARIOLLE; Maëlan LE GOFF; Olivier SANTONI

  1. By: Ahlfeldt, Gabriel M.; Koutroumpis, Pantelis; Valletti, Tommaso
    Abstract: This paper shows that having access to a fast Internet connection is an important determinant of capitalization effects in property markets. Our empirical strategy combines a boundary discontinuity design with controls for time-invariant effects and arbitrary macro-economic shocks at a very local level to identify the causal effect of broadband speed on property prices from variation that is plausibly exogenous. Applying this strategy to a micro data set from England between 1995 and 2010 we find a significantly positive effect, but diminishing returns to speed. Our results imply that disconnecting an average property from a high-speed first-generation broadband connection (offering Internet speed up to 8 Mbit/s) would depreciate its value by 2.8%. In contrast, upgrading such a property to a faster connection (offering speeds up to 24 Mbit/s) would increase its value by no more than 1%. We decompose this effect by income and urbanization, finding considerable heterogeneity. These estimates are used to evaluate proposed plans to deliver fast broadband universally. We find that increasing speed and connecting unserved households passes a cost-benefit test in urban and some suburban areas, while the case for universal delivery in rural areas is not as strong.
    Keywords: internet; property prices; capitalization; digital speed; universal access to broadband
    JEL: H4 L1 R2
    Date: 2017–07
  2. By: Livan, Giacomo; Caccioli, Fabio; Aste, Tomaso
    Abstract: The peer-to-peer (P2P) economy relies on establishing trust in distributed networked systems, where the reliability of a user is assessed through digital peer-review processes that aggregate ratings into reputation scores. Here we present evidence of a network effect which biases digital reputation, revealing that P2P networks display exceedingly high levels of reciprocity. In fact, these are much higher than those compatible with a null assumption that preserves the empirically observed level of agreement between all pairs of nodes, and rather close to the highest levels structurally compatible with the networks’ reputation landscape. This indicates that the crowdsourcing process underpinning digital reputation can be significantly distorted by the attempt of users to mutually boost reputation, or to retaliate, through the exchange of ratings. We uncover that the least active users are predominantly responsible for such reciprocity-induced bias, and that this fact can be exploited to obtain more reliable reputation estimates. Our findings are robust across different P2P platforms, including both cases where ratings are used to vote on the content produced by users and to vote on user profiles.
    JEL: G32 F3 G3
    Date: 2017–06–14
  3. By: Joël CARIOLLE (Ferdi); Maëlan LE GOFF (CEPII); Olivier SANTONI (Ferdi)
    Abstract: This paper provides city-level evidence on the impact of fast Internet on firm performances in developing and transition economies. Over the last two decades, international connectivity has been boosted by the laying of more than 300 sub-marine telecommunication cables (SMC). Almost all coastal developing and transition countries are henceforth plugged to the global Internet, so that the remaining structural impediments to Internet economy’s growth are twofold: first the digital isolation, i.e. the gap between Internet users and the existing and often lacking terrestrial telecommunication infrastructure network; and second, the country’s exposure to SMC faults. We estimate the impact of Internet access on firm performance by adopting an instrumental variable (IV) approach reflecting these two digital vulnerabilities. Estimations are carried out using large a sample of firms from more than 2,600 cities in some 60 developing and transition countries. They stress that a 10% increase in the incidence of e-mail use among firms, induced by lower digital vulnerabilities, raises the firm’s average annual sales by 24%, average sales per worker by 18%, and temporary employment by 15%. This result is robust to the exclusion of outliers, of exporters and big firms, of firms created after SMC arrival, and to the use of other proxies for firms’ access to Internet. It therefore suggests the existence of large spillover effects of fast Internet at the local level.
    Keywords: Internet, digital vulnerabilities, Developing countries, NICT, Submarine cables, infrastructures, telecommunications, firm performance
    Date: 2017–07

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