nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2018‒01‒29
two papers chosen by
Walter Frisch
Universität Wien

  1. A statistical analysis of industrial penetration and internet intensity in Taiwan By Chia-Lin Chang; Yu-Chieh Wu; Michael McAleer
  2. The Price of Discovering Your Needs Online By E. Carroni; L. Ferrari; S. Righi

  1. By: Chia-Lin Chang (Department of Applied economics, Department of Finance National Chung Hsing University, Taiwan.); Yu-Chieh Wu (Department of Applied Economics National Chung Hsing University Taichung, Taiwan.); Michael McAleer (Department of Quantitative Finance National Tsing Hua University, Taiwan and Econometric Institute Erasmus School of Economics Erasmus University Rotterdam, The Netherlands and Department of Quantitative Economics Complutense University of Madrid, Spain And Institute of Advanced Sciences Yokohama National University, Japan.)
    Abstract: This paper investigates the effect of industrial penetration (geographic concentration of industries) and internet intensity (the proportion of enterprises that use the internet) for Taiwan manufacturing firms, and analyses whether the relationships are substitutes or complements. The sample observations are based on 153,081 manufacturing plants, and covers 26 two-digit industry categories and 358 geographical townships in Taiwan. The Heckman selection model is used to accommodate sample selectivity for unobservable data for firms that use the internet. The empirical results from two-stage estimation show that: (1) a higher degree of industrial penetration will not affect the probability that firms will use the internet, but will affect the total expenditure on internet intensity; (2) for two-digit SIC industries, industrial penetration generally decreases the total expenditure on internet intensity; and (3) industrial penetration and internet intensity are substitutes.
    Keywords: Industrial penetration, Internet intensity, Sample selection, Incidental truncation.
    JEL: D22 L60
    Date: 2018–01
  2. By: E. Carroni; L. Ferrari; S. Righi
    Abstract: Thanks to new digital technologies, web users are continuously targeted by offers that potentially fit their interests even if they are not actively looking for a product. Does this matching always promote transactions with high social value? We consider a model in which web users with state-contingent preferences are targeted by relevant banners. We characterize the optimal strategy of a seller who, in addition to the price of the offered good, designs a banner. We show that, in equilibrium, there is a positive relationship between the price of the offered good and the accuracy of the banner sent to users. Then, we consider the strategic decision of a Platform that attracts sellers because of its targeting abilities and we underline that a reduction in seller's costs may translate into less informative banners and lower prices, fueling purchases of goods that rational individuals may regret due to the persuasive nature of banners.
    JEL: D80 D82 D83 L10 M37
    Date: 2018–01

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