nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2019‒01‒21
eight papers chosen by
Walter Frisch
Universität Wien

  1. Telecommunication Submarine-Cable Deployment and the Digital Divide in Sub-Saharan Africa By Joël Cariolle
  2. Data is Different: Why the World Needs a New Approach to Governing Cross-border Data Flows By Susan Aaronson
  3. The brave new world of digital personal assistants: Benefits and challenges from an economic perspective By Budzinski, Oliver; Noskova, Victoriia; Zhang, Xijie
  4. Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records By Blascak, Nathan; Cheney, Julia S.; Hunt, Robert M.; Mikhed, Vyacheslav; Ritter, Dubravka; Vogan, Michael
  5. Infringing Use as a Path to Legal Consumption: Evidence from a Field Experiment By Hong Luo; Julie Holland Mortimer
  6. Patterns of domestic and cross-border e-commerce in Spain: A gravitational model approach By Hicham Ganga; Javier Alonso; Vincenzo Spiezia; Jan Tscheke
  7. Data Minefield: How AI is Prodding Governments to Rethink Trade in Data By Susan Aaronson
  8. Approaches to market openness in the digital age By Francesca Casalini; Javier López González; Evdokia Moïsé

  1. By: Joël Cariolle
    Abstract: The recent deployment of fibre-optic submarine cables (SMCs) in sub-Saharan Africa (SSA) raised the prospects for the digital economy expansion and the whole sub-continent take-off, but also exposed countries and populations to new sources of vulnerability. This paper provides empirical evidence on the ambivalent effect of SMC deployment on the digital divide in 46 SSA countries. On the one hand, results show that the laying of SEACOM, MainOne and EASSy cables in 2009-2010 has yielded a three percentage points increase in internet penetration rates. This is a huge increase, meaning that the deployment of these cables has almost doubled the penetration of Internet in the sub-continent’s population. On the other hand, exogenous sources of telecommunication disruptions related to SMC laying – the country’s exposure to SMC outages and digital isolation – are found to reduce internet and mobile penetration rates, to lower investments in ICTs, and to increase mobile-cellular tariffs and the wireline network instability. Therefore, while SMC arrival in SSA has reduced the digital divide, this divide would be lower if SSA countries were less digitally vulnerable.
    Keywords: ICT, internet, submarine cables, infrastructures, telecommunications, digital divide, Sub-Saharan Africa
    JEL: F02 L96 O33 O18
    Date: 2018
  2. By: Susan Aaronson (George Washington University)
    Abstract: Companies, governments, and individuals are using data to create new services such as apps, artificial intelligence (AI) and the internet of things (IoT). These data-driven services rely on large pools of data and a relatively unhindered flow of data across borders (few market access or governance barriers). The current approach to governing cross-border data flows through trade agreements has not led to binding, universal, nor interoperable rules governing the use of data. Trade diplomats first established principles to govern cross-border data flows, and then drafted e-commerce language in free trade agreements, rather than through the WTO, the most international trade agreement. Data-driven services however, will require a different domestic and international regulatory environment than that developed to facilitate e-commerce. Most countries with significant numbers of data-driven firms are in the process of debating how to regulate these services and the data that underpins them. I argue that policymakers must devise a more effective approach to regulating trade in data for four reasons: the unique nature of data as an item exchanged across borders; the sheer volume of data exchanged; much of this data exchanged across borders is personal data, and the fact that although data could be a significant source of growth, many developing countries are unprepared to participate in this new data driven economy and to build new data driven services. This article begins by with an overview and then describes how trade in data de is different from trade in goods or services. It then examines analogies used to describe data as an input, which can help understand how data could be regulated. Next, we discuss how trade policymakers are regulating trade in data and how these efforts have created a patchwork. Finally, it suggests an alternative approach. "
    Keywords: data, digital trade, AI, internet, trade, FTA, WTO
    JEL: F1 F5
    Date: 2018–10
  3. By: Budzinski, Oliver; Noskova, Victoriia; Zhang, Xijie
    Abstract: The paper applies economic theories to give an overview of the emerging phenomenon of digital personal assistants (DPAs). A DPA is an intelligent automated system that interacts with the user through a dialogue in natural language, and meanwhile applying third-party services to obtain information and perform various actions. We analyze the benefits of increasing usage of DPAs, such as reduction of transaction costs, enhanced organization efficiency, procompetitive effects, and boosting the e-commerce economy. Besides benefits, however, adopting DPA in life may also contain some risks and downsides, which may reduce the positive welfare effects or even lead to decreasing welfare: biased services, market power on the DPA market and economic dependence on a dominant DPA, potential leveraging of DPA suppliers' market power into neighboring markets, personalized data (ab)use and privacy, media bias and manipulation of public opinion.
    Keywords: digital personal assistant,DPA,platform economics,economics of privacy,imperfect competition,behavioral economics,antitrust,smart speaker,auto-mated assistant,virtual assistant,digital butler,digital helper,digital assistant,speech-based interface,agent-based assistant,algorithmic assistant,digitization,digital economy
    JEL: L86 L13 L40 D43 D90 D82 K21 O33
    Date: 2018
  4. By: Blascak, Nathan (Federal Reserve Bank of Philadelphia); Cheney, Julia S. (Federal Reserve Bank of Philadelphia); Hunt, Robert M. (Federal Reserve Bank of Philadelphia); Mikhed, Vyacheslav (Federal Reserve Bank of Philadelphia); Ritter, Dubravka (Federal Reserve Bank of Philadelphia); Vogan, Michael (moody's analytics)
    Abstract: This paper examines how a negative shock to the security of personal finances due to severe identity theft changes consumer credit behavior. Using a unique data set of consumer credit records and alerts indicating identity theft and the exogenous timing of victimization, we show that the immediate effects of fraud on credit files are typically negative, small, and transitory. After those immediate effects fade, identity theft victims experience persistent, positive changes in credit characteristics, including improved Risk Scores. Consumers also exhibit caution with credit by having fewer open revolving accounts while maintaining total balances and credit limits. Our results are consistent with consumer inattention to credit
    Keywords: identity theft; fraud alert; Risk Score; consumer protection; credit report
    JEL: D14 D18 G02
    Date: 2019–01–09
  5. By: Hong Luo (Harvard Business School); Julie Holland Mortimer (Boston College)
    Abstract: Copyright infringement may result from frictions preventing legal consumption, but may also reveal demand. Motivated by this fact, we run a field experiment in which we contact firms that are caught infringing on expensive digital images. Emails to all firms include a link to the licensing page of the infringed image; for treated firms, we add links to a significantly cheaper licensing site. Making infringers aware of the cheaper option leads to a fourteen-fold increase in the ex-post licensing rate. Two additional experimental interventions are designed to reduce search costs for (i) price and (ii) product information. Both interventions—immediate price comparison and recommendation of images similar to those infringed—have large positive effects. Our results highlight the importance of mitigating user costs in small-value transactions.
    Keywords: intellectual property, digital piracy, copyright, field experiment
    JEL: O3 O33 O34 C9 C93
    Date: 2018–12–20
  6. By: Hicham Ganga; Javier Alonso; Vincenzo Spiezia; Jan Tscheke
    Abstract: This paper presents econometric evidence on the determinants of domestic and cross-border e-commerce in Spain based on BBVA anonymised data. The paper applies the gravity model of trade to explain online credit card payment flows, using all private customer transactions of BBVA for Spain.
    Keywords: Working Paper , Consumption , Digital economy , Analysis with Big Data , Spain
    JEL: B22 F41 L81
    Date: 2018–12
  7. By: Susan Aaronson (George Washington University)
    Abstract: No nation alone can regulate artificial intelligence (AI) because it is built on cross- border data flows. • Countries are just beginning to figure out how best to use and to protect various types of data that are used in AI, whether proprietary, personal, public or metadata. • Countries could alter comparative advantage in data through various approaches to regulating data — for example, requiring companies to pay for personal data. • Canada should carefully monitor and integrate its domestic regulatory and trade strategies related to data utilized in AI.
    Keywords: AI, trade, FTA, WTO, internet, data
    JEL: F1 F5
    Date: 2018–11
  8. By: Francesca Casalini (OECD); Javier López González (OECD); Evdokia Moïsé (OECD)
    Abstract: The digital transformation has had a profound impact on international trade, lowering barriers to internationalisation and contributing to growing trade competitiveness, but at the same time making international trade transactions more complex. Distinctions between goods and services and between modes of delivery have become blurred, and trade today must not only to be faster and more reliable, but also meet a range of regulatory requirements that differ across markets, including those related to privacy, consumer protection and security. Against this backdrop, this paper suggests that new and more holistic approaches to market openness are needed for the 21st century. These should take into consideration issues that span goods, services and digital networks more jointly and involve more international dialogue between a range of stakeholders and policy communities. The paper then discusses how principles of good regulatory practice in relation to market openness – in particular, transparency, non-discrimination, interoperability and avoidance of unnecessary trade restrictiveness – can provide guidance when approaching some of these emerging challenges, with a view to helping inform policy makers as they consider rules for the digital age.
    Keywords: data flows, Digital trade, digitalisation, market openness, trade policy
    JEL: F13 O33
    Date: 2019–01–21

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