Archive for the ‘academia’ Category

Digital piracy: an update

January 22, 2015 Comments off

Digital piracy: an update (PDF)
Source: Université catholique de Louvain (Center for Operations Research and Econometrics)

The objective of this note is to provide a comprehensive and up-to-date overview of digital piracy. Although we put the emphasis on the economic analysis, we also briefly present the legal context and its recent evolution. As digital piracy consists in infringing intellectual property laws, it is important to start by understanding the rationale of such laws. That allows us to define more precisely what is meant by digital piracy. We can then move to the economic analysis of piracy. We start with the basic analysis, which explains why piracy is likely to decrease the profits of the producers of digital products; we also examine how the producers have reacted to digital piracy when it started to grow. We review next more recent contributions that point at possible channels through which piracy could improve the profitability of digital products. These channels have inspired new business models for the distribution of digital products, which we describe in the last part of the essay. Throughout the essay, we report the results of some of the most recent empirical studies, so as to quantify the impacts of digital piracy.

Labor Union Membership and Life Satisfaction in the United States

January 19, 2015 Comments off

Labor Union Membership and Life Satisfaction in the United States (PDF)
Source: Baylor University (Flavin) and University of Arkansas, Little Rock (Shufeldt)

While a voluminous literature examines the effects of organized labor on workers’ wage and benefit levels in the United States, there has been little investigation into whether membership in a labor union directly contributes to a higher quality of life. Using data from the World Values Survey, we uncover evidence that union members are more satisfied with their lives than those who are not members and that the substantive effect of union membership on life satisfaction rivals other common predictors of quality of life. Moreover, we find that union membership boosts life satisfaction across demographic groups regardless if someone is rich or poor, male or female, young or old, or has a high or low level of education. These results suggest that organized labor in the United States can have significant implications for the quality of life that citizens experience.

Why Has Urban Inequality Increased?

January 8, 2015 Comments off

Why Has Urban Inequality Increased? (PDF)
Source: Brown University (and others)

The increase in wage inequality since 1980 in the United States has been more pronounced in larger cities, even after accounting for differences in the composition of the workforce across locations. Using Census of Population and Census of Manufacturers data aggregated to the local labor market level, this paper examines the importance of changes in the factor bias of agglomeration economies, capital-skill complementarity, changes in the relative supply of skilled labor, and mutual interactions for understanding the more rapid increases in wage inequality in larger cities between 1980 and 2007. Parameter estimates of a production function that incorporates each of these mechanisms indicate strong evidence of capital-skill complementarity, increasing skill bias of agglomeration economies and declining capital bias of agglomeration economies. Immigration shocks serve as a source of exogenous variation across metropolitan areas in changes to the relative supply of skilled labor versus unskilled labor. The direct relative demand effects of the changing factor biases of agglomeration economies rationalize 77-82 percent of the more rapid increases in wage inequality in more populous local labor markets. Interactions between capital-skill complementarity and changes in the factor bias of agglomeration economies have generated outward and inward shifts in the relative demand for skilled labor in larger cities that approximately offset.

The Decoupling Effect of Digital Disruptors

January 7, 2015 Comments off

The Decoupling Effect of Digital Disruptors (PDF)
Source: Harvard Business School Working Papers

While the Internet’s first wave of disruption was marked by the unbundling of digital content, the second wave, decoupling, promises to generate more casualties in an even broader array of industries. Digital start-ups are disrupting traditional businesses by inserting themselves at every juncture in the customer’s consumption chain. By decoupling-the act of separating activities that people are used to co-consuming-new digital businesses are disrupting retailing, telecom, and other industries. Decoupling allows consumers to benefit from the value created at a lower cost or effort compared to what is delivered by traditional businesses. For those companies, the only solutions are to either recouple activities or rebalance to create and capture value (i.e., revenues) from both activities separately. Here, digital technologies can be seen as an instrument that will both disrupt traditional business models and potentially preserve them.

The impact of the Innovation, Research and Technology Sector on the UK economy

January 7, 2015 Comments off

The impact of the Innovation, Research and Technology Sector on the UK economy
Source: Oxford Economics

Oxford Economics has estimated the contribution of the innovation, research and technology sector to the UK economy, taking into account not only the direct, indirect (supply chain) and induced (employee spending) impacts, but also a range of additional or ‘catalytic’ impacts.

The latter are particularly important for this sector, due to the amount of research and development undertaken by the organisations themselves and to activities enhancing the benefits of R&D undertaken by universities and industry (e.g. through collaboration, networking and the provision of facilities such as technology parks).

Taking all of these impacts into account, we estimate the sector’s contribution to the UK economy in 2013 to have been in the £32-36 billion range, or some 2.3-2.6% of total GDP.​

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The Impact of User-Generated Content on Sales: A Randomized Field Experiment

January 6, 2015 Comments off

The Impact of User-Generated Content on Sales: A Randomized Field Experiment (PDF)
Source: Technischen Universität Darmstadt

This study examines the causal relationship between popularity information and purchasing behavior in an online store. In a randomized field experiment we exogenously manipulated the visibility of user-generated content similar to Google’s +1s or Facebook’s Likes. Displaying the number of people who “Like” a product caused a +12.97% sales increase (13,883.74 EUR in the treatment group; 12,289.46 EUR in the control group). We find that popularity information influences shopping behavior significantly if it is displayed in the consumers’ leisure time. This result is consistent with observational learning. For well-planned and goal-oriented purchases, knowing the preferences of others is of little importance. This information is more valuable on not so goal-oriented and, hence, more time-consuming shopping trips where consumers are searching for interesting, new products. The results also suggest that Likes have a significant monetary value, but without orthogonal variation, the valuation of Likes can easily be overestimated (by a factor of 2.26 in our sample).

Leveraging Market Power Through Tying: Does Google Behave Anti-Competitively?

December 23, 2014 Comments off

Leveraging Market Power Through Tying: Does Google Behave Anti-Competitively? (PDF)
Source: Harvard Business School Working Papers

I examine Google’s pattern and practice of tying to leverage its dominance into new sectors. In particular, I show how Google used these tactics to enter numerous markets, to compel usage of its services, and often to dominate competing offerings. I explore the technical and commercial implementations of these practices and then identify their effects on competition. I conclude that Google’s tying tactics are suspect under antitrust law.


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