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Digital goods and the new economy

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  • Quah, Danny

Abstract

Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from an Arrow -Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.

Suggested Citation

  • Quah, Danny, 2003. "Digital goods and the new economy," LSE Research Online Documents on Economics 2236, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:2236
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    References listed on IDEAS

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    1. Quah, Danny, 2000. "Internet cluster emergence," LSE Research Online Documents on Economics 2220, London School of Economics and Political Science, LSE Library.
    2. Quah, Danny, 2000. "Internet cluster emergence," European Economic Review, Elsevier, vol. 44(4-6), pages 1032-1044, May.
    3. Danny Quah, 2000. "Internet Cluster Emergence," CEP Discussion Papers dp0441, Centre for Economic Performance, LSE.
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    Cited by:

    1. W. Erwin Diewert & Takanobu Nakajima & Alice Nakamura & Emi Nakamura & Masao Nakamura, 2011. "Returns to scale: concept, estimation and analysis of Japan's turbulent 1964–88 economy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(2), pages 451-485, May.
    2. Michael Vogelsang, 2010. "Dynamics of two-sided internet markets," International Economics and Economic Policy, Springer, vol. 7(1), pages 129-145, May.
    3. Minodora URSACESCU & Mihai CIOC, 2014. "The Concept Of Information In Contemporary Economic Analysis €“ An Economic Approach Of Informational Goods," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 8(1), pages 598-605, November.
    4. Luigi Marengo, 2020. "How much will the vaccine cost (if ever discovered….)," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(3), pages 511-517, September.
    5. Marengo, Luigi & Pasquali, Corrado, 2006. "Non rivalry and complementarity in computer software," MPRA Paper 25589, University Library of Munich, Germany.
    6. Lewis Evans & Patrick Hughes, 2003. "Competition Policy in Small Distant Open Economies: Some Lessons from the Economics Literature," Treasury Working Paper Series 03/31, New Zealand Treasury.
    7. Sepehrdoust, Hamid & Zamani Shabkhaneh, Saber, 2018. "How knowledge base factors change natural resource curse to economic growth?," Technology in Society, Elsevier, vol. 54(C), pages 149-154.
    8. Cheng, Chih-Yang & Chien, Mei-Se & Lee, Chien-Chiang, 2021. "ICT diffusion, financial development, and economic growth: An international cross-country analysis," Economic Modelling, Elsevier, vol. 94(C), pages 662-671.
    9. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating a Program of Public Funding of Scientific Activity. A Case Study of FONCYT in Argentina," OVE Working Papers 1206, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
    10. Sebastian von Engelhardt & Sushmita Swaminathan, 2008. "Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights," Discussion Papers of DIW Berlin 799, DIW Berlin, German Institute for Economic Research.
    11. Luigi Marengo, 2019. "Is this time different? A note on automation and labour in the fourth industrial revolution," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(3), pages 323-331, September.
    12. Maurseth, Per Botolf, 2018. "The effect of the Internet on economic growth: Counter-evidence from cross-country panel data," Economics Letters, Elsevier, vol. 172(C), pages 74-77.
    13. Pasquale Giungato & Roberto Rana & Angela Tarabella & Caterina Tricase, 2017. "Current Trends in Sustainability of Bitcoins and Related Blockchain Technology," Sustainability, MDPI, vol. 9(12), pages 1-11, November.
    14. Dave HEATLEY & Bronwyn HOWELL, 2009. "The Brand is the Bundle Strategies for the Mobile Ecosystem," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(75), pages 79-102, 3rd quart.
    15. Patrick Legros, 2005. "Art and the Internet: Blessing the Curse?," Levine's Bibliography 666156000000000502, UCLA Department of Economics.
    16. Muazu Ibrahim & Yakubu Awudu Sare & Ibrahim Osman Adam, 2021. "An application of frequency domain approach to the causal nexus between information, communication and technology infrastructure and financial development in selected countries in Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1206-1235, January.
    17. Mohammad Ali MORADI & Meysam KEBRYAEE, 2009. "Impact of Information and Communication Technology on Economic Growth in Selected Islamic Countries," EcoMod2009 21500068, EcoMod.
    18. Heatley, David & Howell, Bronwyn, 2009. "The Brand is the Bundle - Strategies for the Mobile Ecosystem," Working Paper Series 4038, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.

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    More about this item

    Keywords

    aspatial; emergence; idea; information; innovation; intellectual asset; Internet; knowledge; Open Source; weightless economy;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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