nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2020‒02‒17
eight papers chosen by
Marek Giebel
Universität Dortmund

  1. Competition and privacy in online markets: Evidence from the mobile app industry By Kesler, Reinhold; Kummer, Michael E.; Schulte, Patrick
  2. How Broadband Internet Affects Labor Market Matching By Bhuller, Manudeep; Kostol, Andreas Ravndal; Vigtel, Trond Christian
  3. Digital Platforms and the Demand for International Tourism Services By Lopez Cordova,Jose Ernesto
  4. On the Basis of Brain: Neural-Network-Inspired Change in General Purpose Chips By Ekaterina Prytkova; Simone Vannuccini
  5. Money for Nothin’ – Digitalization and Fluid Tax Bases By Blix, Mårten
  6. Declining Business Dynamism in Belgium By Gert Bijnens; Jozef Konings
  7. Global Challenges and Survival Strategies of the SMEs in the Era of Economic Globalization: A Systematic Review By Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ; Prasanna, RPIR; Jayasundara, JMSB; Rajapakshe, PSK
  8. Stages of Development of Payment Systems : Leapfrogging across Countries and MENA's Place in the World By Gevaudan,Clement; Lederman,Daniel

  1. By: Kesler, Reinhold; Kummer, Michael E.; Schulte, Patrick
    Abstract: Policy makers are increasingly concerned about the combination of market power and massive data collection in digital markets. This concern is fueled by the theoretical prediction that more market power causes firms to collect ever more data from their users. We investigate the relationship between market power and data collection empirically. We analyze data about more than 1.5 million mobile applications in several thousand submarkets of Google's Play Store. We observe these data for over two years and combine information on an app's data collection with information about its competitive environment. Our analysis highlights a robust positive relationship between market power and data collection. We find that more data are being collected in concentrated markets, and apps with higher market shares collect more data. This pattern robustly emerges across a series of cross-sectional and panel regressions as well as a series of specifications that exploit exogenous variation.
    Keywords: Competition,Market Power,Privacy,User Data,Apps
    JEL: L17 D4 D85 D29
    Date: 2019
  2. By: Bhuller, Manudeep (University of Oslo); Kostol, Andreas Ravndal (Arizona State University); Vigtel, Trond Christian (University of Oslo)
    Abstract: How the internet affects job matching is not well understood due to a lack of data on job vacancies and quasi-experimental variation in internet use. This paper helps fill this gap using plausibly exogenous roll-out of broadband infrastructure in Norway, and comprehensive data on recruiters, vacancies and job seekers. We document that broadband expansions increased online vacancy-postings and lowered the average duration of a vacancy and the share of establishments with unfilled vacancies. These changes led to higher job-finding rates and starting wages and more stable employment relationships after an unemployment-spell. Consequently, our calculations suggest that the steady-state unemployment rate fell by as much as one-fifth.
    Keywords: unemployment, information, job search, matching
    JEL: D83 J63 J64 L86
    Date: 2020–01
  3. By: Lopez Cordova,Jose Ernesto
    Abstract: Tourism is an important source of foreign exchange and employment across developing economies. A scant literature has explored the relationship between tourism and the advent of the internet. This paper contributes to the tourism-trade literature and studies the empirical relationship between international tourism and the adoption of digital technologies that facilitate search about tourism opportunities across countries. It links foreign visits with the spread of the use of the internet in sending countries and the level of development of business-to-consumer digital tools in host countries. The paper estimates a well-specified gravity model of tourist arrivals between country pairs with panel data. The results indicate that frictions affecting bilateral tourism flows have been attenuated by the advent of digital tools. The absolute value of the effects of bilateral geographic distance, language differences, and border-contiguity seem to be reduced by the use of the internet by potential tourists and the business sector in host countries. The results are robust to alternative proxies for internet use for tourism search proxied by data from Google trends. The paper also presents simulations of the potential impacts of advances in the adoption of digital tools over time, linking the adoption process to mechanisms of technology adoption that are commonplace in the literature.
    Date: 2020–02–13
  4. By: Ekaterina Prytkova (Friedrich Schiller University Jena, Department of Economics and Business Administration); Simone Vannuccini (Science Policy Research Unit, University of Sussex Business School, University of Sussex)
    Abstract: In this paper, we disentangle the changes that the rise of Artificial Intelligence Technologies (AITs) is inducing in the semiconductor industry. The prevailing von Neumann architecture at the core of the established “intensive” technological trajectory of chip production is currently challenged by the rising difficulty to improve product performance over a growing set of computation tasks. In particular, the challenge is exacerbated by the increasing success of Artificial Neural Networks (ANNs) in application to a set of tasks barely tractable for classical programs. The inefficiency of the von Neumann architecture in the execution of ANN-based solutions opens room for competition and pushes for an adequate response from hardware producers in the form of exploration of new chip architectures and designs. Based on an historical overview of the industry and on collected data, we identify three characteristics of a chip — (i) computing power, (ii) heterogeneity of computation, and (iii) energy efficiency — as focal points of demand interest and simultaneously as directions of product improvement for the semiconductor industry players and consolidate them into a techno– economic trilemma. Pooling together the trilemma and an analysis of the economic forces at work, we construct a simple model formalising the mechanism of demand distribution in the semiconductor industry, stressing in particular the role of its supporting services, the software domain. We conclude deriving two possible scenarios for chip evolution: (i) the emergence of a new dominant design in the form of a “platform chip” comprising heterogeneous cores; (ii) the fragmentation of the semiconductor industry into submarkets with dedicated chips. The convergence toward one of the proposed scenarios is conditional on (i) technological progress along the trilemma’s edges, (ii) advances in the software domain and its compatibility with hardware, (iii) the amount of tasks successfully addressed by this software, (iv) market structure and dynamics.
    Keywords: neural network; Artificial Intelligence, technological trajectory; semiconductor industry; hardware; software
    JEL: L63 O31 O33
    Date: 2020–02
  5. By: Blix, Mårten (Research Institute of Industrial Economics (IFN))
    Abstract: Technology and digitalization are transforming economic activity, but tax policies are lagging behind. The development also encompasses a broad shift in value-creation, with less emphasis on physical production and more on soft knowledge/intangibles, notably copyrights, firm-specific processes, data and software. We discuss what these changes imply, and we outline the economic factors of scale- and network effects that magnify existing economic trends. A key concern is that the distortionary effects of taxation will become more severe and that tax bases will erode. As factors of production are becoming more fluid and mobile, multinational corporations have been able to shift their profits to low-tax jurisdictions, so called base erosion profit shifting (BEPS). To counter this possibility, a number of governments in 2019 began to unilaterally impose taxes aimed specifically at digital firms. Unless a broad agreement can be reached within the nexus of the more than 130 countries in the OECD/BEPS framework, the existing multinational rule-based order for corporate tax could begin to crumble. On the domestic front, the tax challenges for labour income are, if possible, even more extensive. Although the labour market changes are slower, their key role in public finances imply that even minor reductions result in significant funding challenges. To ensure we get money for somethin’, we conclude that a new comprehensive tax reform is urgent.​
    Keywords: Digital tax; OECD/BEPS; Digitalization; Taxation
    JEL: H21 H25 H26 H27 O33
    Date: 2020–02–05
  6. By: Gert Bijnens; Jozef Konings
    Abstract: Using 30 years of data from all for-profit firms incorporated in Belgium, we show that business dynamism and entrepreneurship have been declining over recent decades. This decline set in around the year 2000 following a decade of declining start-up rates. We also observe a decreasing share of young firms that become high-growth firms and more importantly a declining propensity for small (not necessarily young) firms to experience fast growth. Interestingly, a similar decline in business dynamism occurred in the U.S., where firms face a far less rigid institutional environment than in Belgium. These remarkable similarities suggest that global trends rather than country specific changes are at the basis of this evolution. We show evidence that points to the role of ICT intensity and in explaining the secular decline in business dynamism.
    Keywords: business dynamism, firm dynamics, firm growth, entry, reallocation, high-growth firms, high-impact firms
    JEL: D21 E24 J6 L25
    Date: 2018–10
  7. By: Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ; Prasanna, RPIR; Jayasundara, JMSB; Rajapakshe, PSK
    Abstract: Globalization has presented new challenges for SMEs due to the increased competition, and as a result, the mortality rate of SMEs after a shorter period of commencement is relatively high. Accordingly, SMEs necessity to adopt survival strategies and strategic decisions to succeed in the business environment facing global challenges. This study attempted to critically review the existing literature on the global challenge for SMEs to identify the survival and succeeding strategies of SMEs in the current competitive business environment. Published reports in the field by the recognized multilateral organizations and seventy-five excellent research papers published by four recognized journal publishing companies: Emerald, Elsevier, Tayler & Francis, and MDPI were selected for inclusion in this review. Based on this review, it has been found that leading global challenges for SMEs in economic globalization include: global market competition, global financial and economic crisis, information communication technology, rise of Multinational Corporations, Transnational Corporations, changing profile of consumers and their preferences, trade dumping, international terrorism and religious conflicts, and trade wars. Further research could take on survival Strategies of SMEs in the industrial level to identify the sustainability-oriented specific policies. As well as a need for a stronger theoretical examination on survival strategies of SMEs in the global challenges.
    Keywords: Globalization, Global Challenges, Survival Strategies, Competitiveness, Small and Medium Enterprises
    JEL: M21
    Date: 2019–12–20
  8. By: Gevaudan,Clement; Lederman,Daniel
    Abstract: This paper studies the relationship between the level of economic development and the incidence of three forms of payments across countries, namely the incidence of bank accounts, digital payments, and mobile money accounts among the adult populations across countries. It presents simple statistical tests of leapfrogging, the phenomenon by which poor countries surpass rich countries in the provision of payments mechanisms. It contributes to a broader and long-standing literature on stages of development, as well as to the literature on financial development and access to finance. The findings suggest that there is evidence of"absolute"and"relative"leapfrogging, with both terms defined in the paper. In addition, the Middle East and North Africa region, on average, suffers from a notable underperformance gap across all observed stages of payment-systems development. This finding suggests that the region suffers from structural impediments to the development of its financial and banking systems that go well beyond the adoption of digital-technology tools.
    Keywords: ICT Economics,Economic Growth,Industrial Economics,Economic Theory&Research,Financial Sector Policy,Telecommunications Infrastructure,Financial Structures
    Date: 2020–01–07

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