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Digital Goods and the New Economy

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  • Quah, Danny

Abstract

Digital goods are bit strings, sequences of 0s and 1s, that have economic value. They are distinguished from other goods by five characteristics: digital goods are non-rival, 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 a 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.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3846.

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Date of creation: Mar 2003
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Handle: RePEc:cpr:ceprdp:3846

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Related research

Keywords: aspatial; emergence; idea; information; innovation; intellectual asset; internet; knowledge; open source; weightless economy;

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References

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  1. Quah, Danny, 2000. "Internet cluster emergence," European Economic Review, Elsevier, vol. 44(4-6), pages 1032-1044, May.
  2. Danny Quah, 2000. "Internet cluster emergence," LSE Research Online Documents on Economics 2220, London School of Economics and Political Science, LSE Library.
  3. Danny Quah, 2000. "Internet Cluster Emergence," CEP Discussion Papers dp0441, Centre for Economic Performance, LSE.
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Cited by:
  1. Marengo, Luigi & Pasquali, Corrado, 2006. "Non rivalry and complementarity in computer software," MPRA Paper 25589, University Library of Munich, Germany.
  2. 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).
  3. Markus Pasche, 2005. "(Self-)Regulation of a Natural Monopoly via Complementary Goods - the Case of F/OSS Business Models," Jenaer Schriften zur Wirtschaftswissenschaft 18/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
  4. Sebastian von Engelhardt, 2006. "Die ökonomischen Eigenschaften von Software," Jenaer Schriften zur Wirtschaftswissenschaft 14/2006, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
  5. Markus Pasche & Sebastian von Engelhardt, 2004. "Volkswirtschaftliche Aspekte der Open-Source-Softwareentwicklung," Jenaer Schriften zur Wirtschaftswissenschaft 18/2004, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
  6. Michael Vogelsang, 2010. "Dynamics of two-sided internet markets," International Economics and Economic Policy, Springer, vol. 7(1), pages 129-145, May.
  7. Lewis Evans and 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.
  8. Patrick Legros, 2005. "Art and the Internet: Blessing the Curse?," NajEcon Working Paper Reviews 172782000000000001, www.najecon.org.
  9. 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.

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