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Does Marginal Cost Pricing of Public Sector Information Spur Firm Growth?

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  • Koski, Heli

Abstract

The firm-level data concerning re-users of geographical information (GI) active in architectural and engineering activities and related technical consultancy sector from 15 countries during the year 2000-2007 suggests that the pricing of public sector GI strongly relates to the firms sales growth. Firms functioning in the countries in which public sector agencies provide fundamental geographical information either freely or at maximum marginal costs have grown, on average, about 15 percent more per annum than the firms in the countries in which public sector GI is priced according to the cost-recovery principle. The difference-in-difference estimations further show that positive growth impact materializes already one year after switching to the marginal cost pricing scheme but a stronger boost to the firm growth takes place with a two year lag. Interestingly, marginal cost pricing has not generated notable growth among the large firms; it has been SMEs benefiting most from cheaper geographical information. It seems credible that switching to marginal cost pricing of public sector information (PSI) substantially lowers SMEs barriers to enter new market areas in the provision of GI-based products and services.

Suggested Citation

  • Koski, Heli, 2011. "Does Marginal Cost Pricing of Public Sector Information Spur Firm Growth?," Discussion Papers 1260, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1260
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    Cited by:

    1. Veenswijk, Marcel & Koerten, Henk & Poot, Jaap, 2012. "Unravelling Organizational Consequences of PSI Reform - An In-depth Study of the Organizational Impact of the Reuse of Public Sector Data," Discussion Papers 1275, The Research Institute of the Finnish Economy.

    More about this item

    Keywords

    public sector information; pricing; firm growth; technology policy;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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