Economic Analysis of the Digital Economy

Economic Analysis of the Digital Economy

Avi Goldfarb, Shane M. Greenstein, and Catherine E. Tucker

Print publication date: 2015

ISBN: 9780226206844

Publisher: University of Chicago Press


The rapid decline in the cost of storage, computation, and transmission of data has changed how firms operate and has altered the kinds of products and goods being sold. Increasingly, economic activity is digital. This volume aims to set an agenda for future research in the economics of digitization. Each chapter identifies a promising area of research related to the rise of digital technology, touching topics in areas such as the economics of internet infrastructure, leisure time, search, prediction, labor markets, and advertising. Research on the economics of digitization is distinguished by an emphasis on how digital technology interacts with market outcomes. Digital technologies have some features that suggest that many well-studied economic models may not apply. For example, digital products and services have very low marginal costs of production and distribution and consequently a far greater variety of such goods are available. While such features do not require fundamentally new economic models, they do require more than simply taking theoretical and empirical results from other markets and assuming the implications will be the same. The volume highlights that many public policies that were developed for the offline world seem poorly adapted to digital markets. This has implications in policy debates in areas such as copyright, security, privacy, and antitrust.

Table of Contents


Avi Goldfarb, Shane M. Greenstein, and Catherine E. Tucker

I Internet Supply and Demand

II Digitization, Economic Frictions, and New Markets

3 The Future of Prediction

Lynn Wu and Erik Brynjolfsson

5 Searching for Physical and Digital Media

Michael R. Baye, Babur De los Santos, and Matthijs R. Wildenbeest

6 Ideology and Online News

Matthew Gentzkow and Jesse M. Shapiro

7 Measuring the Effects of Advertising

Randall Lewis, Justin M. Rao, and David H. Reiley

8 Digitization and the Contract Labor Market

Ajay Agrawal, John Horton, Nicola Lacetera, and Elizabeth Lyons

9 Some Economics of Private Digital Currency

Joshua S. Gans and Hanna Halaburda

III Government Policy and Digitization

10 Estimation of Treatment Effects from Combined Data

Tatiana Komarova, Denis Nekipelov, and Evgeny Yakovlev

11 Information Lost

Catherine L. Mann

12 Copyright and the Profitability of Authorship

Megan MacGarvie and Petra Moser

13 Understanding Media Markets in the Digital Age

Brett Danaher, Samita Dhanasobhon, Michael D. Smith, and Rahul Telang