Industrial Organization and the Digital Economy

Digital technology has dramatically changed the structure of many industrial sectors. The rise of the Internet and increased broadband access have given rise to new business models and strategies for firms dealing with both electronic and physical goods. Industrial Organization and the Digital Economy focuses on changes in the two industries most affected by the new technology: software and music. The book offers the theoretical and factual grounding necessary for understanding the changes in industrial organization brought about by the digital economy, with the chapters together providing an accessible and interesting cross-fertilization of fact and theory. Moreover, two chapters demonstrate the relevance of the emerging literature on two-sided markets for the digital economy. The contributors consider such topics as the innovation value of software; empirical evidence and theoretical analysis regarding the impact of file sharing on music sales; the ability of firms to modify their products and offer them in different versions; the practice of preannouncing information goods; the effects of electronic commerce on both consumers and retailers; and price-setting by electronic mediators. The studies in Industrial Organization and the Digital Economy provide a valuable starting point for future research on other aspects of the subject, including the open-source movement and trust and reputation.