nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2023‒12‒04
five papers chosen by
Marek Giebel, Universität Dortmund

  1. The contribution of US broadband infrastructure subsidy and investment programs to GDP using input-output modeling By Matthew Sprintson; Edward Oughton
  2. Awareness of artificial intelligence: Diffusion of information about AI versus ChatGPT in the United States By Goel, Rajeev K.; Nelson, Michael A.
  3. The Growth Potential of B2b Travel Technologies in Korea By Lee, Sunhak
  4. Big Telcos Aren’t Necessarily Better: A Case Study of EU versus US Market Concentration By Bryson, Joanna J.; Malikova, Helena; Garbe, Lisa; Backovsky, David
  5. Oligopoly competition between satellite constellations will reduce economic welfare from orbit use By Julien Guyot; Akhil Rao; Sebastien Rouillon

  1. By: Matthew Sprintson; Edward Oughton
    Abstract: More than one-fifth of the US population does not subscribe to a fixed broadband service despite being a recognized merit good. For example, less than 4% of citizens earning more than US \$70k annually do not have broadband, compared to 26% of those earning below US \$20k annually. To address this, the Biden Administration has undertaken one of the largest broadband investment programs ever via The Bipartisan Infrastructure Law, with the aim of addressing this disparity and expanding broadband connectivity to all citizens. Proponents state this will reduce the US digital divide once-and-for-all. However, detractors say the program leads to unprecedented borrowing at a late stage of the economic cycle, leaving little fiscal headroom. Subsequently, in this paper, we examine broadband availability, adoption, and need and then construct an input-output model to explore the macroeconomic impacts of broadband spending in Gross Domestic Product (GDP) terms. Finally, we quantify inter-sectoral macroeconomic supply chain linkages from this investment. The results indicate that federal broadband investment of US \$42 billion has the potential to increase GDP by up to US \$216 billion, equating to 0.2% of annual US GDP over the next five years, with an estimated Keynesian investment multiplier of 2.89. To our knowledge, we contribute the first economic impact assessment of the US Bipartisan Infrastructure Law to the literature.
    Date: 2023–11
  2. By: Goel, Rajeev K.; Nelson, Michael A.
    Abstract: This paper addresses the awareness about the artificial intelligence across states in the United States. We uniquely create indices of Google internet search results for general AI awareness and about ChatGPT, normalizing alternatively by internet users and land area. An understanding of the awareness about AI would provide useful insights into regulatory attempts to monitor and guard the AI technologies, besides suggesting alternatives for laggard states to catch up. Econometric results to explain the drivers of AI awareness show that, ceteris paribus, more prosperous states had greater awareness about AI and ChatGPT. On the other hand, states with greater economic freedom had a lower awareness. States with more men to women has lower AI awareness when hits were normalized by area, but the reverse was true when weighted by internet users. States with a higher proportion of the elderly population were no different from the other states, while those with greater urbanization had more AI/ChatGPT awareness when the internet hits were weighted by land area. Finally, states bordering Canada were no different from other states, while states bordering Mexico generally had a lower AI/ChatGPT awareness.
    Keywords: artificial intelligence, AI, ChatGPT, Internet, machine learning, Google search, economic freedom, urbanization, gender
    JEL: O33 D83 L86
    Date: 2023
  3. By: Lee, Sunhak (Korea Institute for Industrial Economics and Trade)
    Abstract: A 2019 Organization for Economic Cooperation and Development (OECD) report on the future of tourism highlighted changes in travel demand and supply due to technological advances as important trends shaping the future of tourism. The report stressed the need for suppliers in the industry to actively respond to these trends, especially as technological innovations such as digital platforms, the Internet of Things (IoT), artificial intelligence (AI), and virtual reality (VR) are expected to change the tourism experience significantly. Many of the report’s OECD predictions are now coming true, as demographic change and an evolving social structure along with advances in digital technology are now driving change on the supply side of the tourism industry. On the demand side, we can observe increasing levels of diversification and personalization in tourism behavior with the emergence of new younger consumers (gen Z) and now more active seniors. There are many new products, services, and delivery methods using AI, big data, and immersive technologies to respond to new, more diversified demand. In particular, the rise of online travel agencies (OTAs), coupled with the use of digital technology, has led to the rapid spread of platform-oriented transactions. More intensive use of digital technology and the increasingly popularity of platform-oriented transactions have not only led to new convergence between formerly divergent technologies and industries — spawning entirely new lines of business in the process — they have altered the fabric of the tourism industry ecosystem. In this article, we describe what business-to-business (B2B) technologies are and the implications for policy carried by our findings. Thank you for reading this abstract of a report from the Korea Institute for Industrial Economics and Trade! Visit us on YouTube: Visit us on Instagram: Visit our website:
    Keywords: tourism; tourism industry; travel; digital platforms; platform convergence; Internet of Things; IoT; artificial intelligence; AI; virtual reality; VR; demographic change;
    JEL: L83 L86 Z31 Z38
    Date: 2023–10–31
  4. By: Bryson, Joanna J. (Hertie School); Malikova, Helena; Garbe, Lisa; Backovsky, David
    Abstract: Telecommunications companies (telcos) provide infrastructure essential to the delivery of digital content. The competitiveness of European Union businesses is presently seen as critically dependent on expansion of next-generation communication technologies. Yet, EU telcos are displaying returns on capital that disappoint private investors, leading in some cases to depressed share prices, and potentially making them vulnerable to takeovers bids by financial investors. Given their essential role, the prospect of EU telcos falling into mostly foreign-owned, fiercely profit-maximizing, and/or cost-cutting investors is unappealing for policy makers, at both the national and the European level. One solution suggested by the telcos themselves is that they be allowed to consolidate. Economic theory does not provide a clear answer to how such concentration might affect investment in infrastructure. In this paper, we provide a comparative empirical analysis of the relationship between market concentration and investment in infrastructure in the telco sector. First, we compare investment rates in infrastructure by major telco companies in both the EU and the more concentrated US market. We find more value being returned to customers in the form of infrastructure investment in the less-concentrated EU market. Second, we compare telcos' profitability with that of other corporations involved in the information or ``eye-ball'' value chain. We find operating profits of telcos on both sides of the Atlantic are broadly in line with other companies of the value chain, with the notable exception of the highly concentrated digital ad exchange business. This evidence suggests that lack of incentives rather than lack of ability explains the larger portion of profits invested into infrastructure in the EU compared to the US. Rather than allowing market concentration, which could raise consumer prices and lower infrastructure investment incentives, EU regulators might consider other fund-raising mechanisms, such as redistributing profits from digital ad exchanges.
    Date: 2023–01–14
  5. By: Julien Guyot (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Akhil Rao; Sebastien Rouillon (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Orbital space enables many essential services, such as weather forecasting, global communication, navigation, Earth observation for environmental and agricultural management, and national security applications. Orbit use is increasingly defined by firms launching coordinated fleets—"constellations"—of satellites into low-Earth orbit. These firms operate in markets with few or no competitors, such as the market for broadband internet provision to rural areas. How will oligopolistic competition shape the allocation of orbital space? We analyze orbital-use patterns and economic welfare when two profit-maximizing firms operate satellite constellations with sophisticated collision avoidance systems. We compare this duopoly equilibrium to public utility constellations designed and regulated to maximize economic welfare from orbit use. We show that imperfect competition reduces economic welfare from orbit use by up to 12%—$1.1 billion USD—per year and distorts the allocation of orbital space. The nature of the distortion depends on the magnitude of constellation-related environmental damages. When damages are low, economic welfare is maximized by larger-than-equilibrium constellations. When damages are high, economic welfare is maximized by smaller-than-equilibrium constellations. Between the growing commercial and national interests in outer space and the importance of low-Earth orbit to space exploration, orbit-use management is likely to be a fruitful and policy-relevant area for economic research. We conclude with a discussion of future research directions in orbit-use management relevant to policymakers around the world.
    Keywords: Space economics, Satellites, Oligopoly, Common-pool resources, Game theory
    Date: 2023–10–16

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