nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2019‒01‒07
eleven papers chosen by
Walter Frisch
Universität Wien

  1. "Geo-Political Economy" and Ecosystem in Asian I&CT Markets By Kawamata, Takahiro
  2. E-commerce and developing country-SME participation in global value chains By Lanz, Rainer; Lundquist, Kathryn; Mansio, Grégoire; Maurer, Andreas; Teh, Robert
  3. Antitrust for Internet Giants By Taschdjian, Martin; Alleman, James
  4. Can productivity still grow in service-based economies?: Literature overview and preliminary evidence from OECD countries By Stéphane Sorbe; Peter Gal; Valentine Millot
  5. Internet Platforms' Threats: Facebook, Google, etc. By Alleman, James
  6. Does Online Access Promote Research in Developing Countries? Empirical Evidence from Article-Level Data By Frank Mueller-Langer; Marc Scheufen; Patrick Waelbroeck
  7. Effects of an ad valorem Web Tax in a Cournot-Nash market for digital advertising By Diego d'Andria
  8. Estimating Consumer Inertia in Repeated Choices of Smartphones By Grzybowski, Lukasz; Nicolle, Ambre
  9. The Effects of Risk and Ambiguity Aversion on Technology Adoption: Evidence from Aquaculture in Ghana By Christian Crentsil; Adelina Gschwandtner; Zaki Wahhaj
  10. Robust-yet-fragile: A simulation model on exposure and concentration at interbank networks By Bulent Ozel; Mario Eboli; Andrea Toto; Andrea Teglio
  11. Bridging the Digital Divide: Making the Digital Economy Benefit to the Entire Society By Zhang, Bin; Jin, Zhiye; Peng, Zhidao

  1. By: Kawamata, Takahiro
    Abstract: Since the East Asian Miracle report was published by the World Bank in 1993, East Asian countries have achieved economic development with the "flying geese pattern" respectively as well as advancements in informatization based on each political and cultural context. In particular, the revolution in information and communications technology (I&CT) drives commercial and social usage of the Internet throughout multiple devices such as personal computers, tablets, and smart-phones. East Asian cultural contexts thereby create commonalities over their territories and maintain their distinctive characters as well. While telecommunications and media industries are under governmental control, with government regulations in most Asian countries, platform businesses such as social network services (SNSs), have expanded across borders, demonstrating the principle of network externality and economy. In addition, cultural and/or social contents easily expand with identity and universality as high culture and with popularity as pop- and/or sub-cultures among younger generations within areas. This paper examines the potential of East and South East Asian markets including not only China, Korea, and Japan, but also Taiwan, Hong Kong, and Singapore, for mobile and wired communications, their technologies, services, content, and applications. It also describes the dynamism of networking among interested players over the next generation of information and communication technologies and their applications, such as SNSs and "FinTech", including mobile payment and e-commerce, as well as content including audio and visual content, and game software; in the context of the "Ecosystem" of I&CT business and the path-dependency of social shaping of technological trajectories as enhanced in each political and cultural territory. There may be a dramatic change occurring in the structure of the industry affecting not only telecommunications network components, terminal equipment vendors and software developers, but also network operators and service providers located in Asian territories. Therefore, our analysis places emphasis on the dynamic formulation of multi-tiered and multifaceted frameworks of "Geo-Cultural Informatics," which encapsulates the geo-politics and geo-economics associated with cultural informatics, within industrial clusters over Asian marketplaces. This paper also suggests a new framework of market structure with some hieratic layers and geographic areas, e.g. living area (space) 「生活圏」, commercial area (sphere)「商業圏」, economic zone (block)「経済圏」. These areas/spheres are composed with cultural and political inherence based on geography and history respectively as well as path-dependency on technological and institutional trajectory. Especially electronic commerce (e-commerce), which is not only the trade of digital contents and services, but also online shopping with digital payment/settlement, e.g. electronic money and credit card authorization including PayPal, reflects cultural contexts and/or political institutional frameworks, even if the compatibility and settlement system between nations has been ensured. In the e-commerce facilitated by FinTech, it can be seen the battles and/or alliances between Internet service providers, e.g. (US), Alibaba (CN), Tencecnt (CN), Kakao Talk (KR), LINE (JP), Facebook (US), Twitter (US), Instagram (US), and local providers, and financial providers, including credit card companies, banks, insurance and securities companies, for customer's accounts and records of their preferences and assets. We finally discuss on the geo-political economic issues of the digital economy in Asian living/commercial/economic areas/spheres within the ecosystem of ICT.
    Keywords: Evolution of Technology,Ecosystem of industries,Geo-politics,Geo-economics,"Geo-cultural informatics"
    Date: 2018
  2. By: Lanz, Rainer; Lundquist, Kathryn; Mansio, Grégoire; Maurer, Andreas; Teh, Robert
    Abstract: Two far-reaching developments have increased the trade opportunities for SMEs in developing countries. Firstly, the rise of the internet and advances in ICT have reduced trade-related information and communication costs. Secondly, the international fragmentation of production has increased the opportunities for SMEs to specialize in narrow activities at various stages along the production chain. Using firm-level data from the World Bank's Enterprise Survey, we test whether digital connectivity, as captured by whether a firm has a website or not, facilitates the participation of manufacturing SMEs from developing countries in global value chains (GVCs). We find robust evidence that digital connectivity facilitates the participation of manufacturing SMEs in GVCs in terms of both backward and forward linkages. SMEs with a website tend to import a higher share of their inputs used for production and export a higher share of their sales as compared to SMEs without a website. Furthermore, the findings indicate that the effect of having a website on GVC participation is stronger for SMEs than for large firms. Beyond digital connectivity at the firm level, we also assess the role of a country's ICT infrastructure in facilitating GVC participation of SMEs. We find that SMEs tend to participate more in GVCs in countries where a higher share of the population has fixed broadband subscriptions. This result also holds if we control for other country-level factors such as the quality of logistics services, rule of law and access to finance. Our findings can provide guidance for policy makers in developing countries about the importance of investing in ICT infrastructure, creating a regulatory and policy environment conducive to e-commerce, and providing SMEs and workers with the digital skills and knowledge to use ICT technologies efficiently.
    Keywords: e-commerce,developing countries,small and medium-sized enterprises,global value chains
    JEL: F14
    Date: 2018
  3. By: Taschdjian, Martin; Alleman, James
    Abstract: There can be no doubt that the FANG companies – Facebook, Amazon, Netflix and Google, as well as Twitter – have transformed society since their emergence. Like all social transformations, the changes wrought by their services have had ripple effects that are both positive and negative. On the positive side, soaring consumer access to information, news, social networks, and entertainment has been stimulated by the ever-more ubiquitous and falling prices of broadband fixed and mobile bandwidth. E-government has transformed the delivery of public services. However, negative effects have likewise been stark. Certainly, there have been huge disruptions caused by e-commerce. Retail industries, industrial supply chains, banking and publishing are just a few obvious examples. State tax collectors are fighting the loss of sales tax collections. These problems tend to get highlighted by the losers from the process of "creative destruction." Because Facebook and Google are two-sided markets, their economic rents are "hidden" from the public . On the user side of the market, prices are zero – "free." The other side, advertising rate are "hidden." Facebook's and Google's revenues are derived from advertising which appear when you go to their sites. They can extract exorbitant prices for ads, since they are virtually the only source that can target ads directly to potential clients. Because these companies can identify you, the ads can be targeted to your specific wants and needs, even creating "wants and needs" based on your profile. So, what the "customer" – you – perceived as free is not. Indeed, you are the commodity being sold to the advertisers. While Facebook and Google Herfindahl-Hirschman indices (HHI) are high, indicating a concentrated market or highly concentrated market by several different definitions of their markets. For example, Google has 93 percent of the search market. Combined Google and Facebook currently control over half of digital advertising and one-third of total advertising. Nevertheless, no serious antitrust case or legislation has addressed this monopoly power. This paper examines the antitrust cases against Facebook and Google. In this paper, we attempt to go back to first principles to discern whether there is a more appropriate approach to examine the underlying economics of these industries in the hopes that tools can be applied that more directly address the problems.
    Keywords: Advertising,antitrust,competition,internet,media,regulation,pricing
    JEL: D4 K2 L1 L2 L5 L9
    Date: 2018
  4. By: Stéphane Sorbe; Peter Gal; Valentine Millot
    Abstract: Services employ an ever-increasing share of workers in all OECD countries. This trend is likely to continue as it reflects deep structural forces, such as increasing consumption of services with rising incomes and population ageing and the growing role of intangible assets. Services are very diverse, but overall tend to have weaker productivity levels and growth rates than manufacturing. As a result, the shift to services entails a moderate but persistent drag on productivity growth. Still, there are reasons to hope for a pick-up in service productivity in the future, including thanks to new technologies (e.g. digital platforms, artificial intelligence). This concerns both “knowledge intensive” services (e.g. information and communication) and less knowledge intensive ones (e.g. personal transport). Harnessing this productivity potential requires adjusting policies to foster innovation and efficient use of new technologies, enhance competitive forces by reducing information asymmetries, barriers to entry and switching costs, and increase the tradability of services within countries and across borders.
    Keywords: automation, measurement, online platforms, productivity, services, structural change
    JEL: E24 L80 O40
    Date: 2018–12–21
  5. By: Alleman, James
    Abstract: Free!! Google and Facebook!!! We all know them, what to worry about? Everything! The giants of the internet are expanding into every corner of the economy, politics and our lives. They control the majority of digital advertising; Alphabet, Google's parent, and Facebook receive more than 60 percent of digital advertising revenue (Media Buying 2017); Google controls over 90 percent of search on the web (Statcounter 2017); Facebook and Google represent 40% of consumption of digital content (Economist 2017c). Facebook dominates the social media market (Galloway 2017, p. 96); Amazon has nearly 40 percent of online Xmas sales and is destroying the traditional retail outlets (Galloway 2017, p. 28). Apple earns over 90 percent of smart phone profits, although it has less than 20 percent of the market (Galloway 2017, p. 75). This paper will examine the threat to social order and democracy posed by Facebook and Google, as well as others in the internet space. Facebook, and Google have control over what information and news we receive though "black‐box" algorithms; they select what "we need." In addition, these platforms have not taken significant measures to address "fake‐news", bots, trolls, or other malicious software on the internet. Indeed, they make money off the proliferation of this misinformation. For example, even by its own calculation, "Facebook has estimated that Russian content on its network, including posts and paid ads, reached 126 million Americans, around 40% of the nation's population." (Economist 2017c) Up to 60 million Facebook accounts are fake, according to its own estimate (Shane and Isaac 2017). And according to the Economist (2017c), in the United States' presidential campaign, one out of every five political messages was posted by robots (bots) on Twitter. FANGs have a business models which encourages this type of practice (Shane and Isaac 2017). These models are designed to maximize growth and maintain users. Thus, they involve easy sign up, lack of verification of authenticity; and only, reluctantly, if at all, closing accounts with significant cause (Shane and Isaac 2017, Zittrain 2014). This paper will examine these issues in depth.
    Keywords: Advertising,Antitrust Policy,Democracy,Elections,Propaganda ICT,Internet Platforms,Political Economy
    JEL: K21 L1 L2 L4 L5 L9
    Date: 2018
  6. By: Frank Mueller-Langer (European Commission – JRC); Marc Scheufen (Ruhr University Bochum); Patrick Waelbroeck (Télécom ParisTech)
    Abstract: Universities in developing countries have rarely been able to subscribe to academic journals in the past. The “Online Access to Research in the Environment” initiative (OARE) provides institutions in developing countries with free online access to more than 5,700 environmental science journals. We analyze the effect of OARE on scientific output in five developing countries. We apply difference-in-difference-in-differences estimation using a balanced panel with 161,450 observations derived from 36,202 journal articles published by authors affiliated with 2,490 research institutions. Our approach allows us to explore effects across scientific fields, i.e. OARE vs. non-OARE fields, within institutions and before and after OARE registration. We benefit from the fact that variation in online access to scientific literature is exogenous at the level of scientific fields. Additional self-selection issues are dealt with by using an endogenous binary variable model estimated by a Bayesian Markov-Chain-Monte-Carlo method. We provide evidence for a positive marginal effect of online access via OARE on publication output that ranges between +48% and +57%. Our results suggest that the most productive institutions benefit the most from OARE while the least productive institutions barely benefit from it.
    Keywords: online access, scientific productivity, difference-in-difference, Bayesian Markov Chain monte carlo estimation
    JEL: L17 O33
    Date: 2018–06
  7. By: Diego d'Andria (European Commission - JRC)
    Abstract: We extend the theory of tax incidence under Cournot-Nash oligopolistic competition to study the effects of an ad valorem sales tax on Web services (so-called Web Tax) that are provided free of charge to users, and produce advertising space sold to businesses. Ads are more valuable to advertisers the more users are served by a Web service. Users have ads-neutral preferences and Web companies compete in a Cournot-Nash fashion on the advertising market but enjoy monopolistic power in the service market they serve. We demonstrate that, contrary to standard theoretical results, the equilibrium market price might be reduced by a Web Tax. The conditions for such a decrease depend upon the elasticity of ads demand.
    Keywords: Web tax, digital advertising, Cournot competition, tax incidence…
    JEL: D43 H2 L13
    Date: 2018–12
  8. By: Grzybowski, Lukasz; Nicolle, Ambre
    Abstract: In this paper, we use a unique database on switching between mobile handsets in a sample of about 5,000 subscribers using tariffs without commitment from a single mobile operator on monthly basis between March 2012 and December 2014. We estimate discrete choice model in which we account for disutility from switching to a different operating systems and handset brands and for unobserved time-persistent preferences for operating systems and brands. Our estimation results indicate presence of significant state-dependency in the choices of operating systems and brands. We find that it is harder for consumers to switch from iOS to Android and other operating systems than from Android and other operating systems to iOS. Moreover, we find that there is significant time-persistent heterogeneity in preferences for different operating systems and brands, which also leads to state-dependent choices. We use our model to simulate market shares in the absence of switching costs and conclude that the market share of Android and smaller operating systems would increase at the expense of the market share of iOS.
    Keywords: Smartphones,Consumer Inertia,Switching Costs,Mixed Logit,iOS,Android
    JEL: L13 L50 L96
    Date: 2018
  9. By: Christian Crentsil; Adelina Gschwandtner; Zaki Wahhaj
    Abstract: We study how aversion to risk and ambiguity affects the adoption of new technologies by Ghanaian smallholder aquafarmers. We conduct a set of field experiments designed to elicit farmers's risk and ambiguity preferences and combine it with surveybased information on their technology adoption decisions. We find that aquafarmers who are more risk-averse were quicker to adopt the new technologies: a fast-growing breed of tilapia fish, extruded feed and floating cages. By contrast, ambiguity aversion has no effect on the adoption of the new tilapia breed and extruded feed. Furthermore, it slows down the adoption of floating cages - a technology which entails higher fixed costs than the others - and the effect is diminishing in the number of other adopters in the village. We argue that these differential effects are due to the fact that the technologies are risk-reducing, with potential ambiguity about their payoff distributions at the early stages of adoption. The findings highlight the importance of distinguishing between risk and ambiguity in investigating technology adoption decisions of small-holder farmers in developing countries.
    Keywords: Uncertainty Aversion, Aquafarming, Technology Adoption, Extruded Feed, Floating Cages, Akosombo strain of Tilapia (AST)
    JEL: C93 D81 O33 Q12 Q16
    Date: 2018–12
  10. By: Bulent Ozel (Department of Economics, Universitat Jaume I, Castellón, Spain); Mario Eboli (Department of Economics, Gabriele d’Annunzio University, Italy); Andrea Toto (Department of Economics, Gabriele d’Annunzio University, Italy); Andrea Teglio (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain; Ca Foscari University of Venice, Italy)
    Abstract: This paper presents a layered simulation model and the results from its initial employment. In this study, we focus on financial contagion due to debt exposure and structural concentration at interbank networks. Our results suggest that a medium density of connections in regular networks is already sufficient to induce a ’robust-yet-fragile’ response to insolvency shocks, while the same occurs in star networks only when the centralization is very high. The simulation model enables us to create stock-flow-consistent interbank networks with desired level of network connectivity and centralization. A parsimonious set of network configuration parameters can be employed not only to create stylized network structures with exact connectivity and centralization features but also random core-periphery network representations of a two-tier banking system. Our generic setup decouples the steps of a research on financial contagion. The layers of the simulator covers phases of a research from interbank network configuration to probing the details of a contagion. The presented version enables researchers (i) to create an interbank system of a desired network structure, (ii) to initialize bank balance sheets where the network in previous step can optionally be used as an input, (iii) to configure a controlled or randomized sequence of exogenous shock vectors, (iv) to simulate and inspect detailed process of a single contagion process via tables, graphs and plots generated by the simulator, (v) to design and run automated Monte Carlo simulations, (vi) to analyze results of Monte Carlo simulations via tools from the simulation analysis library.
    Keywords: Contagion, interbank networks, two-tear systems, core-periphery networks
    JEL: C32 C63 D53 D85
    Date: 2018
  11. By: Zhang, Bin; Jin, Zhiye; Peng, Zhidao
    Abstract: With the development of information technology, the connotation of the Digital Divide has evolved constantly. At present, we have entered the new era of "Digital Economy" and newer information technologies such as Big Data, Artificial Intelligence, Internet of Things, and Cloud Computing have been widely developed and applied. New technologies should also be included in the measurement of the Digital Divide. At the same time, the physical gap in traditional information technology has been greatly reduced. Under the condition that physical access conditions are similar, the gap in digital technology skills and use is highlighted. Under such circumstances, the measurement of the Digital Divide should be more concerned with Digital Literacy and Digital Experience. Under the background of the Digital Economy, the existence of the Digital Divide means that there is a huge first-mover advantage for the party at a more advanced position. Countries, regions and communities with faster information development will be able to use information dividends promptly to promote their own economic development. However, the party that is far lagging behind will have fewer opportunities to participate in the information-based Digital Economy. At the same time that economic development is at a disadvantage, because under the new economy condition, more work and social activities are closely related to information technology, therefore, opportunities for the information poor to participate in online education, training, entertainment, shopping and communication have also become fewer, and these have exacerbated social inequalities. In this study, qualitative analysis and quantitative analysis were used to study the Digital Divide evaluation system in the era of Digital Economy. In the qualitative part of this article, we summarize the definition of Digital Economy, the definition of Digital Divide and the measurement theory of regional Digital Divide by studying the literature, laying a solid theoretical foundation for the research of this article. Starting from the six aspects of Digital Technology Infrastructure, ICT Readiness, Economy Development, Government Innovation Support, Education and Digital Literature, Digital Contents and Applications, we put forward research hypotheses and build the corresponding evaluation system model. In the quantitative research part of this paper, empirical research methods were used to verify the hypothesis and model. Among them, through a large amount of domestic research data collected from China Statistical Yearbook, with SPSS statistical analysis software to process the data, this paper proposes a complete index system of informatization and Digital Divide evaluation in the Digital Economy era and weights distribution for the system, using Factor Analysis, Analytic Hierarchy Process and Expert Interview Methods. On this basis, this article understands the current situation of informatization development and regional Digital Divide by the calculation of the index. Through the Clustering Analysis and Average Deviation Analysis, we analyze the causes of the Digital Divide formation, understand the gap of regional informatization and digital development, and find the weakness in digital development. Then, we put forward some suggestions that can effectively improve bridging the Digital Divide to solve the "information gap", "knowledge division" and "rich and poor division" between regions due to the development and application level gap. It provides reference for bridging the Digital Divide and promoting regional information, economic and cultural balanced development. This will enable digital technology to be more utilized in the process of promoting the development of the Digital Economy. Giving full play to the connectivity of the Internet will allow the Digital Economy to benefit more regions and enhance the well-being of the entire society.
    Keywords: Digital Divide,Digital Economy,Evaluation Index System,Policy Suggestion
    Date: 2018

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