1,721,087 research outputs found
Nurturing the Accumulation of Innovations: Lessons from the Internet
Full text linkThe innovations that became the foundation for the Internet originate from two eras that illustrate two distinct models for accumulating innovations over the long haul. The pre-commercial era illustrates the operation of several useful non-market institutional arrangements. It also illustrates a potential drawback to government sponsorship – in this instance, truncation of exploratory activity. The commercial era illustrates a rather different set of lessons. It highlights the extraordinary power of market-oriented and widely distributed investment and adoption, which illustrates the power of market experimentation to foster innovative activity. It also illustrates a few of the conditions necessary to unleash value creation from such accumulated lessons, such as standards development and competition, and nurturing legal and regulatory policies.
Evidence of a Modest Price Decline in U.S. Broadband Services
Full text linkIn this paper, we construct a price index for broadband services in the United States between 2004 and 2009. We analyze over 1500 service contracts offered by DSL and cable providers in the United States. We employ a mix of matched-model methods and hedonic price index estimations to adjust for qualitative improvements. In general, we find some evidence of a quality-adjusted price decline, but the evidence points towards a modest decline at most. Our estimates of the price decline range from 3% to 10% in quality-adjusted terms for the five-year period, which is faster than the BLS estimates for the last three years. These modest price declines look nothing like other parts of electronics, such as computers or integrated circuits, which raises many questions. The results also inform a range of policy discussions about US broadband services.
Is There a Market for Work Group Servers? Evaluating Market Level Demand Elasticities Using Micro and Macro Models
Full text linkThis paper contains an empirical analysis demand for "work-group" (or low-end) servers. Servers are at thecentre of many US and EU anti-trust debates, including the Hewlett-Packard/Compaq merger and investigationsinto the activities of Microsoft. One question in these policy decisions is whether a high share of work serversindicates anything about shortrun market power. To investigate price elasticities we use model-level panel dataon transaction prices, sales and characteristics of practically every server in the world. We contrast estimatesfrom the traditional "macro" approaches that aggregate across brands and modern "micro" approaches that usebrand-level information (including both "distance metric" and logit based approaches). We find that the macroapproaches lead to overestimates of consumer price sensitivity. Our preferred micro-based estimates of themarket level elasticity of demand for work group servers are around 0.3 to 0.6 (compared to 1 to 1.3 in themacro estimates). Even at the higher range of the estimates, however, we find that demand elasticities aresufficiently low to imply a distinct "anti-trust" market for work group servers and their operating systems. It isunsurprising that firms with large shares of work group servers have come under some antitrust scrutiny.demand elasticities, network servers, computers, anti-trust
Nurturing the Accumulation of Innovations: Lessons from the Internet
Full text linkThe innovations that became the foundation for the Internet originate from two eras that illustrate two distinct models for accumulating innovations over the long haul. The pre-commercial era illustrates the operation of several useful non-market institutional arrangements. It also illustrates a potential drawback to government sponsorship – in this instance, truncation of exploratory activity. The commercial era illustrates a rather different set of lessons. It highlights the extraordinary power of market-oriented and widely distributed investment and adoption, which illustrates the power of market experimentation to foster innovative activity. It also illustrates a few of the conditions necessary to unleash value creation from such accumulated lessons, such as standards development and competition, and nurturing legal and regulatory policies.
Three essays on demand and cost in the United States domestic airline industry
No full text"Previous research on airline demand has recognized the existence of at least two customer types, business passengers with high valuations of time and low price elasticity, and tourists having low valuations of time and high price elasticity. Attempts to differentiate between these two groups have generally been based on assumptions about the range of fares paid by each group or the classification of specific routes into ""tourist"" and ""business""."This research uses a differentiated products supply-and-demand model to disentangle the separate effects of hubs on costs and markups. On the demand side, it attempts to capture the fact that airline customers are heterogeneous by allowing customers' preferences over various product specifications to be drawn from a binary distribution. On the cost side, it estimates a very flexible spoke marginal cost function, so as to allow economies of density to vary across different ranges. Demand is estimated in a nested logit framework using unaggregated data from up to 200,000 products from as many as 18,000 markets per quarter. Markups, and thus marginal costs, are obtained on the basis of the assumption that firms price products to maximize profit in each market. Marginal cost is then estimated as a cubic function of leg distance and density."The model is first applied to data for a single quarter to gain an understanding the nature of the advantages enjoyed by carriers at their hub airports. It is then independently applied to data for the fourth quarters of nine consecutive years in order to elucidate the changes which may have occurred to costs and demands as firms reconfigured their fleets and learned the art of ""yield management"". Finally, adapted to the analysis of pooled time series data, the model is applied to the fourth quarters of the years 1989 through 1993 in order to determine the affect on demand and cost of the several bankruptcies which occurred during that period."Made available in DSpace on 2011-05-07T13:36:31Z (GMT). No. of bitstreams: 2
license.txt: 4922 bytes, checksum: 910b249b4beec47e7ab768910c8f966f (MD5)
9712213.pdf: 6429663 bytes, checksum: 06abb2ad48889f67e0ec2f448322a641 (MD5)
Previous issue date: 1996Item marked as restricted to the 'UIUC Users [automated]' Group (id=2) by Howard Ding ([email protected]) on 2011-05-07T14:56:54Z
Item is restricted indefinitely.Restriction data tranferred 2014-07-01T11:26:38-05:00
Original Data
Group with Access UIUC Users [automated]
Release Date: none
Reason: ETDs are only available to UIUC Users without author permissionETDs are only available to UIUC Users without author permissionU of I Onl
Estimating the economic benefits of advances in computer technology
No full textUntil recently, hedonic price indexes were the predominant method for measuring the improvements in price per performance for mainframe computers. These indexes showed that price per performance improved at roughly 20-25% over the past 30 years. However, little attention has been given to how well these indexes measure the benefits buyers receive from improvements in computer technology. Trajtenberg (1990) proposed an alternative measure which purports to measure the benefits from product innovation and applied his procedure to the computed tomography scanner industry. His results show that hedonic indexes understate the true benefits from improvements in technology in that industry. In this work we have proposed an alternative procedure which also measures the benefits which accrue to buyers from improving product technology. We find, in contrast to the results of Trajtenberg, that the hedonic index overstates the true benefits to buyers from product innovation in the mainframe computer industry.In addition to the main result that the benefit index will most likely decline at a slower rate than the hedonic index, we found that the benefit index is sensitive to the distribution of buyers across the product space and to the level of the highest available quality. With regard to the distribution of buyers, we found that as the distribution of buyers shifted toward higher levels of quality, the benefit index declined at a faster rate. This implies that buyers purchasing high levels of quality must benefit more from price reductions and extensions in the product space than buyers purchasing low levels of quality. Therefore, industries in which most buyers are purchasing the highest level of quality available have buyers who benefit more from improving technology than industries where most buyers are purchasing low levels of quality. With regard to the level of the highest available quality, we found that as that level increased, the benefit index declined at a faster rate. This occurred because increasing this level effectively frees up a constraint for buyers and allows them to optimize when making a purchase decision. Thus, industries which see fast rates of growth in available quality levels have buyers who benefit more than industries where there is little or no growth in the highest available quality.Made available in DSpace on 2011-05-07T13:49:32Z (GMT). No. of bitstreams: 2
license.txt: 4922 bytes, checksum: 910b249b4beec47e7ab768910c8f966f (MD5)
9512309.pdf: 4794332 bytes, checksum: 98d5b8bf850e093c40aab148afb9d258 (MD5)
Previous issue date: 1994Item marked as restricted to the 'UIUC Users [automated]' Group (id=2) by Howard Ding ([email protected]) on 2011-05-07T14:59:36Z
Item is restricted indefinitely.Restriction data tranferred 2014-07-01T11:28:08-05:00
Original Data
Group with Access UIUC Users [automated]
Release Date: none
Reason: ETDs are only available to UIUC Users without author permissionETDs are only available to UIUC Users without author permissionU of I Onl
Telecommunications in a new era of competition: Fiber optics, regulatory barriers, and competition
No full text"The telecommunications industry has been affected by innovation and technological changes. Technological changes combined with judicial rulings and policy changes have led to a radical restructuring of the industry. The effects of restructuring on the firms, the consumers, and the role of regulators are currently unclear. A resulting question is ""how are changes in state regulatory policies affecting local exchange carrier infrastructure investment?"" I answer this by examining investment in four new technologies as they are affected by the regulatory policies."The industry operated for decades as a regulated monopoly. As competition, albeit regulated, develops within the industry it is important to analyze the effects of changing or eliminating regulations. Competition in telecommunications affects the regulatory environment, which in turn affects the industry's structure and its competitiveness. Under more competitive conditions, the operating companies and state commissions are pursuing further changes in the environment, which affects how firms invest in new technologies.Changes in the industry are, in part, affected by the advent and adoption of new technologies. Fiber optics and digital technology have been important developments in telecommunications, allowing for dramatic increases in system capabilities, products, and services. Deployment of new technology is undertaken mainly by local exchange carriers, who are limited by the regulatory structure at both the federal and state levels. Many factors affect demand for new technologies, including prices, the firms' characteristics, and characteristics of the state. In order to ascertain which factors are influential, and thus should be considered by policy makers, I analyze the decisions to deploy new technologies. For the study, I collected company specific data on fiber optic cable, DSPC switches, lines with potential access to ISDN, switches equipped with SS7, wages, regulatory characteristics, population, income, and earnings. Using this data, I perform an analysis on the effects of changing regulations on the adoption of new technology.I clarify some issues by examining how investment by local exchange carriers in new technology responded to different cross-sectional and over-time revisions in regulatory policy. The results show that regulatory policies matter in the investment decisions. As firms are placed in more competitive environments, they invest more competitively, maximizing profits. The results regarding the effects of regulatory policy changes are important in the development of telecommunications policy, within each state and for the United States.Made available in DSpace on 2011-05-07T13:28:49Z (GMT). No. of bitstreams: 2
license.txt: 4922 bytes, checksum: 910b249b4beec47e7ab768910c8f966f (MD5)
9624435.pdf: 10160027 bytes, checksum: bafdd382db4e7edcaf889f70b1366c5a (MD5)
Previous issue date: 1995Item marked as restricted to the 'UIUC Users [automated]' Group (id=2) by Howard Ding ([email protected]) on 2011-05-07T14:55:17Z
Item is restricted indefinitely.Restriction data tranferred 2014-07-01T11:25:45-05:00
Original Data
Group with Access UIUC Users [automated]
Release Date: none
Reason: ETDs are only available to UIUC Users without author permissionETDs are only available to UIUC Users without author permissionU of I Onl
Economic Experiments and Neutrality in Internet Access
Full text linkEconomic experiments yield lessons to firms that can be acquired only through market experience. Economic experiments cannot take place in a laboratory; scientists, engineers, or marketing executives cannot distill equivalent lessons from simply building a prototype or interviewing potential customers and vendors. The historical record illustrates that economic experiments were important for value creation in Internet access markets. In general, industry-wide returns from economic experiments exceed private returns, with several important exceptions. Those conclusions motivate an inquiry into whether regulatory policy can play a role in fostering the creation of value. The net neutrality debate is reinterpreted through this lens. A three part test is proposed for encouraging economic experiments from both broadband carriers and providers of complementary services.
Recommended from our members
The Impact of Tech Demand During COVID-19: A Local Optimization Utility-Based Human Migration Model
No full textOver the past two years, COVID-19 has dramatically disrupted the movement of hu- mans across the United States but its impact on society long-term is still unclear. In this paper, I present a locally optimized utility model for a single migration class influenced by tech demand during the pandemic. I derive a formulation for net city utility associated with factors of the labor market, primarily wage differentials, the cost of living, job availabil- ity, and other benefits, and solve the maximization problem for utility at a city at a given time. I then apply the model to a numerical analysis to quantitatively determine the im- pact of tech demand during COVID-19 on human migration in the top 10 most populous cities across the United States, and compare those trends to those determined by the util- ity model with migration numbers reported throughout the pandemic over a period of ten months. This work is a contribution to the theory of local migration models as well as an extension to the literature on optimizing system-wide human migration in the presence of regulations
- …
