Chương 11 nền kinh tế thông tin doc

Chapter 11 The information economy David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation by Peter Smith 11.2 11.3 Use of the internet 0 200 400 600 800 1000 1200 £bn. 1997 1999 2001 2003 Business to business use of the internet 11.4 e-products  An e-product: – can be digitally encoded then transmitted rapidly, accurately and cheaply  e.g. music, films, books, sport …  Fixed costs of producing e-products are huge …  … but marginal costs of distribution are tiny  implying vast economies of scale 11.5 Consuming information  experience  overload  switching costs  network externalities Four key features of e-products: 11.6 Experience products  An experience good or service is one that must be sampled before the user knows its value – information is nearly always new – marketing needs careful attention  free samples  previews  establishing reputation 11.7 Information overload  … arises when the volume of available information is large  …but the cost of processing it is high  screening devices become crucial 11.8 Switching costs  … arise when existing costs are sunk  so changing supplier incurs additional costs  smart suppliers devise strategies for locking in their customers  e.g. air miles, supermarket reward cards 11.9 Network externalities Suppose D 1 represents the demand curve for a product exhibiting network externalities £ Quantity D 1 P 1 Q 1 With price at P 1 , demand is limited. If price is reduced to P 2 , more people find the network attractive so not only is there a move along the demand curve, but there is a shift in demand. Long-run demand is more elastic (DD). P 2 D 2 Q 2 D D 11.10 Information: the supply side  Given substantial economies of scale, we expect monopoly suppliers of information products:  Dominant firm with competitive fringe  e.g. Microsoft  Niche market monopolies [...]... supply of more than one product to reduce the need for price discrimination 11. 11 Competition vs collaboration A strategic alliance is a blend of co-operation and competition, in which a group of suppliers provide a range of products that partly complement one another – – e.g Microsoft and Intel airline alliances: One World, Star 11. 12 Understanding the e-economy 1 The information revolution is changing... information revolution is changing our lives – but few of its activities or market tactics are unprecedented 2 The revolution in technology has not required a corresponding revolution in economic theory 11. 13 . Chapter 11 The information economy David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation by Peter Smith 11. 2 11. 3 Use of the. distribution are tiny  implying vast economies of scale 11. 5 Consuming information  experience  overload  switching costs  network externalities Four key features of e-products: 11. 6 Experience. knows its value – information is nearly always new – marketing needs careful attention  free samples  previews  establishing reputation 11. 7 Information overload  … arises when the volume of