Digital Economics

Digital economics analyses how the increased usage of and the new opportunities created by advances in the ICT have changed the economic aspects of our lives. The advances in the ICT have led to the reduction of various costs that affect economic transactions. In this course we focus on the reduced costs of collecting information, disseminating information and copying, and on the effects that these changes have had on the way people buy and sell goods. We first study the effects of reduced costs of information gathering and the rise of platforms - institutions that facilitate the meetings of buyers and sellers. We then study the effects that the reduction of information collection costs have had on the collection of personal data and the resulting possibilities for personalized pricing. Then we analyse the increase in piracy due to a reduction in the costs of copying products. Time permitting, we analyse how the reduction of information dissemination and verification costs have made it easier for sellers and buyers to build reputation. We use the tools from (theoretical) microeconomics and industrial organization to study these issues.

Topics

1. Search on the internet
2. Two-sided markets
3. Privacy and personal data
4. Piracy and IP rights
5. Reviews and reputation

A student who has completed the course should have the following learning outcomes:

Knowledge

The student knows;

• how digitalisation has affected some fundamental aspects of trading relationships in the economy.
• which costs the digitalisation of the economy has reduced.
• what are some of the effects of these cost reductions.
• the content of some important articles the in the literature on digital economics.

Skills

The students is able to;

• apply concepts from game theory and microeconomic models to analyse specific trading situations.
• formalise questions from digital economics using mathematical terminology.
• solve game-theoretic models when applied to questions from digital economics.
• read and analyse articles from academic economic literature.

General competence

The student;

• can elaborate on a variety of consequences that changes in the economic environment have on the incentives of economic agents and on trading institutions.
• can support made claims with solid economic arguments and, where appropriate, using simple economic models.
• is able to critically analyse arguments related to questions on digital economics that arise in media and everyday discussions.