nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2020‒11‒16
nine papers chosen by
Marek Giebel
Universität Dortmund

  1. The Digital Revolution and COVID-19 By Paolo E. Giordani; Francesco Rullani
  2. Evaluating the impact of next generation broadband on local business creation By Philip Chen; Edward J Oughton; Pete Tyler; Mo Jia; Jakub Zagdanski
  3. Pricing, competition and content for internet service providers By Key, Peter; Steinberg, Richard
  4. Social Media and Newsroom Production Decisions By Julia Cagé; Nicolas Hervé; Béatrice Mazoyer
  5. Estimation of supply and demand of tertiary education places in advanced digital profiles in the EU: Focus on Artificial Intelligence, High Performance Computing, Cybersecurity and Data Science By Alvaro Gomez Losada; Montserrat Lopez-Cobo; Sofia Samoili; Georgios Alaveras; Miguel Vazquez-Prada Baillet; Melisande Cardona; Riccardo Righi; Lukasz Ziemba; Giuditta De-Prato
  6. Valuing Goods Online and Offline: the Impact of Covid-19 By Diane Coyle; David Nguyen
  7. Mergers, branch consolidation and financial exclusion in the US bank market By Joan Calzada; Xavier Fageda; Fernando Martínez-Santos
  8. Reliability and security at the dawn of electronic bank transfers in the 1970s-1980s By Maixe-Altes, J. Carles
  9. Neither Left-Behind nor Superstar: Ordinary Winners of Digitalization at the Ballot By Gallego, Aina; Kurer, Thomas; Schöll, Nikolas

  1. By: Paolo E. Giordani (Dept. of Economics and Finance, LUISS University); Francesco Rullani (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: We develop a simple model of digital markets to analyze the impact of Covid-19 on the digital transformation of sectors. The lockdown due to Covid-19 is modeled as a shock that wipes out the physical market, temporarily leaving digital consumption as the only option. Under plausible assumptions on digital demand and supply, the model predicts that such temporary shock produces an irreversible rise of the digital markets. This happens for three distinct reasons. First, by temporarily eliminating the physical market, Covid-19 provides a strong incentive for firms to carry out the fixed investments necessary to venture into the digital market (supply channel). Secondly, by forcing even the most reluctant consumers into the digital market, Covid-19 pushes them to familiarize with digital platforms, and this confidence endures in the post-Covid era (demand channel). Finally, if consumers' taste for digitalization is affected by the size of the digital market, a market may be entrapped into a low-digital equilibrium indefinitely. In such context, the lockdown due to the pandemic is the shock that may unleash the forces of digitalization and tilt the entire sector towards a high-digital equilibrium (network externalities channel).
    Keywords: digital transformation, digitalization, Covid-19, pandemic, disruptive technologies
    JEL: O3 L8 D8
    Date: 2020–11
  2. By: Philip Chen; Edward J Oughton; Pete Tyler; Mo Jia; Jakub Zagdanski
    Abstract: Basic broadband connectivity is regarded as generally having a positive macroeconomic effect. However, over the past decade there has been an emerging school of thought suggesting the impacts of upgrading to higher speed broadband have been overstated, potentially leading to the inefficient allocation of taxpayer-funded subsidies. In this analysis we model the impacts of Next Generation Access on new business creation using high-resolution panel data. After controlling for a range of factors, the results provide evidence of a small but significant negative impact of high-speed broadband on new business creation over the study period which we suggest could be due to two factors. Firstly, moving from basic to high-speed broadband provides few benefits to enable new businesses being formed. Secondly, strong price competition and market consolidation from online service providers (e.g. Amazon etc.) may be deterring new business start-ups. This analysis provides another piece of evidence to suggest that the economic impact of broadband is more nuanced than the debate has traditionally suggested. Our conjecture is that future policy decisions need to be more realistic about the potential economic impacts of broadband, including those effects that could be negative on the stock of local businesses and therefore the local tax base.
    Date: 2020–10
  3. By: Key, Peter; Steinberg, Richard
    Abstract: We examine competition between two Internet Service Providers (ISPs), where the first ISP provides basic Internet service, while the second ISP provides Internet service plus content, i.e., enhanced service , where the first ISP can partner with a Content Provider to provide the same content as the second ISP. When such a partnering arrangement occurs, the Content Provider pays the first ISP a transfer price for delivering the content. Users have heterogeneous preferences, and each in general faces three options: (1) buy basic Internet service from the first ISP; (2) buy enhanced service from the second ISP; or (3) buy enhanced service jointly from the first ISP and the Content Provider. We derive results on the existence and uniqueness of a Nash equilibrium, and provide closed-form expressions for the prices, user masses, and profits of the two ISPs and the Content Provider. When the first ISP has the ability to choose the transfer price, then when congestion is linear in the load, it is never optimal for the first ISP to set a negative transfer price in the hope of attracting more revenue from additional customers desiring enhanced service. Conversely, when congestion is sufficiently super-linear, the optimal strategy for the first ISP is either to set a negative transfer price (subsidizing the Content Provider) or to set a high transfer price that shuts the Content Provider out of the market.
    Keywords: communication networks; competition; content provider; optimal pricing; Nash equilibrium; profit
    JEL: R14 J01
    Date: 2020–10–01
  4. By: Julia Cagé (Sciences Po Paris, Department of Economics, 28 rue des Saints Pères, 75007 Paris, France, and CEPR (London)); Nicolas Hervé (Institut National de l'Audiovisuel, 28 avenue des Frères Lumière, 94366 Bry-sur-Marne, France); Béatrice Mazoyer (CentraleSupélec, Université Paris-Saclay, 91190 Gif-sur-Yvette, France, and Institut National de l'Audiovisuel, 28 avenue des Frères Lumière, 94366 Bry-sur-Marne, France)
    Abstract: Social media affects not only the way we consume news, but also the way news is produced, including by traditional media outlets. In this paper, we study the propagation of information from social media to mainstream media, and investigate whether news editors are influenced in their editorial decisions by stories popularity on social media. To do so, we build a novel dataset including a representative sample of all tweets produced in French between July 2018 and July 2019 (1.8 billion tweets, around 70% of all tweets in French during the period) and the content published online by about 200 mainstream media during the same time period, and develop novel algorithms to identify and link events on social and mainstream media. To isolate the causal impact of popularity, we rely on the structure of the Twitter network and propose a new instrument based on the interaction between measures of user centrality and news pressure at the time of the event. We show that story popularity has a positive effect on media coverage, and that this effect varies depending on media outlets’ characteristics. These findings shed a new light on our understanding of how editors decide on the coverage for stories, and question the welfare effects of social media.
    Keywords: Internet, Information spreading, Network analysis, Social media, Twitter, Text analysis
    JEL: C31 D85 L14 L15 L82 L86
    Date: 2020–10
  5. By: Alvaro Gomez Losada (European Commission - JRC); Montserrat Lopez-Cobo (European Commission - JRC); Sofia Samoili (European Commission - JRC); Georgios Alaveras (European Commission - JRC); Miguel Vazquez-Prada Baillet (European Commission - JRC); Melisande Cardona (European Commission - JRC); Riccardo Righi (European Commission - JRC); Lukasz Ziemba (European Commission - JRC); Giuditta De-Prato (European Commission - JRC)
    Abstract: In order to investigate the extent to which the education offer of advanced digital skills in Europe matches labour market needs, this study estimates the supply and demand of university places for studies covering the technological domains of Artificial Intelligence (AI), High Performance Computing (HPC), Cybersecurity (CS) and Data Science (DS), in the EU27, United Kingdom and Norway. The difference between demand and supply of tertiary education places (Bachelor and Master or equivalent level) in the mentioned technological domains is referred in this report as unmet students' demand of places, or unmet demand. Demanded places, available places and unmet demand are estimated for the following dimensions: (a) the tertiary education level in which this demand is observed: Bachelor and Master or equivalent programmes; (b) the programme’s scope, or depth with which education programmes address the technological domain: broad and specialised; and (c) the main fields of education where this tuition is offered: Business Administration and Law; Natural sciences and Mathematics; Information and Communication Technology (ICT); and Engineering, Manufacturing and Construction, with the remaining fields grouped together in a fifth category. From these estimations, it is concluded that the number of available places in the EU27, at Bachelor level, reaches 587,000 for studies with AI content, 106,000 places offered in HPC, 307,000 places in CS and 444,000 places offered in the domain of DS. At Master level this demand is comparatively lower, except for the DS domain, were it equals the offer at bachelor level. DS outnumbers AI in demand of places at Master level, with 602,000 and 535,000 demanded places, respectively. The unmet demand for AI, HPC, CS and DS in EU27 at MSc level is approximately 150,000, 33,000, 59,000 and 167,000 places, respectively. At BSc level, the unmet demand reaches 273,000, 53,000, 159,000 and 213,000 places, respectively. Another finding is that the unmet demand for broad academic programmes is higher than for specialised programmes of all technological domains and education levels (Bachelor and Master). Higher availability of places for AI, HPC, CS and DS domains is found for academic programmes taught in the ICT field of education, both at Bachelor and Master levels. For Bachelor studies, Germany and Finland are estimated as the countries with the highest unmet demand in AI, HPC, CS and DS, either with a broad or specialised scope. United Kingdom is the only studied country offering places for all fields of education and technological domains at Bachelor level and Master level. For Master studies, this is also found in Germany, Ireland, France and Portugal.
    Keywords: digital skills, higher education, education supply, education demand, artificial Intelligence, high-performance computing, cybersecurity, data science, digital transformation
    Date: 2020–09
  6. By: Diane Coyle; David Nguyen
    Abstract: This paper uses a survey representative of the UK online population to assess the willingness to accept loss of certain goods. We had conducted an initial survey in February, focusing on ‘free’ online goods and some potential substitutes and comparators. Consistent with other contingent valuation studies, consumers on average assigned valuations to many of these goods, particularly when benchmarked against revenue figures for the services. Our pilot studies, discussed in a forthcoming paper, also suggested that the actual valuations are not well anchored, but the methodology can give consistent rankings among goods. It is also a useful way to assess changes in valuations. Repeating the survey in May, during the UK, lockdown, we observed significant changes in the valuations of different goods and services, with some large differences by age and gender. In this sense the lockdown has acted as a natural experiment testing for the extent to which digital goods and physical goods are substitutes. These valuation changes may indicate which services are most valuable in a post-pandemic world where more activity takes place online. They also provide important, policy-relevant insights into distributional questions.
    Keywords: digital services, valuations, lockdown
    JEL: D12 D60 I31 C43
    Date: 2020–07
  7. By: Joan Calzada (Universitat de Barcelona); Xavier Fageda (Universitat de Barcelona); Fernando Martínez-Santos (Universidad San Pablo CEU)
    Abstract: We analyze the role of bank mergers as determinants of the evolution of branch presence at the county level. Panel regressions based on county-level branch density are used to study differences across urban versus rural counties as well as pre- and post-crisis. The results indicate that bank mergers contributed to the increase of branches in the pre-crisis period and to its reduction in the post-crisis period, but the expansion effect of the mergers before the crisis mainly took place in metropolitan counties. Additional results show that broadband penetration has contributed to the reduction in the number of branches after the crisis and that branch closures are associated with an increase in the share of unbanked and underbanked households at the county level.
    Keywords: Bank branches, Mergers, Competition, Broadband, Financial Exclusion, United States.
    JEL: L16 L22 G21 G34 G38
    Date: 2019
  8. By: Maixe-Altes, J. Carles
    Abstract: From a historical perspective, the concept of reliability and computing security in the early 1970s, when electronic data transfer processes were in infancy, is especially interesting in terms of their implications in technological change and the business of banking. The cases of Japan, Spain and Germany, in terms of their national banking networks, provide an interesting field of analysis in terms of the implications that the online data transfer systems had for banking institutions. Concerns about the reliability of the computing processes and digital security were the key factors. These innovations laid the foundation for the advancement of networks and new banking services that would open up unprecedented horizons in what was to become known as service banking.
    Keywords: computer security and reliability, banks and savings banks, teleprocessing networks, EFT, ICT in banking
    JEL: G21 O33
    Date: 2020–06
  9. By: Gallego, Aina; Kurer, Thomas; Schöll, Nikolas
    Abstract: The nascent literature on the political consequences of technological change studies either left-behind voters or successful technology entrepreneurs ("superstars"). However, it neglects the large share of skilled workers who benefit from limited but steady economic improvements in the knowledge economy. This paper studies how workplace digitalization affects political preferences among the entire active labor force by combining individual-level panel data from the United Kingdom with industry-level data on ICT capital stocks between 1997-2017. We first demonstrate that digitalization was economically beneficial for workers with middle and high levels of education. We then show that growth in digitalization increased support for the Conservative Party, the incumbent party, and voter turnout among beneficiaries of economic change. Our results hold in an instrumental variable analysis and multiple robustness checks. While digitalization undoubtedly produces losers (along with some superstars), ordinary winners of digitalization are an important stabilizing force content with the political status quo.
    Date: 2020–10–27

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