What is the new, networked economy all about? What are “information goods” and how do they differ from traditional goods? How are online businesses different from brick-and-mortar establishments? Is the large firm with its centralized managerial hierarchy obsolete, to be replaced by decentralized, disaggregated, peer-to-peer communities? Is government regulation needed to keep digital markets free, fair, and open? More generally, does the new economy call for a new kind of economics, or is traditional economics still useful?
This course suggests answers to these and related questions, focusing on recent examples, applications, and illustrations, while grounding the discussion on basic economic principles. We begin by studying the growth of the Internet, wireless communication networks, and related technologies, trying to assess just how widely information technology has diffused throughout the economy. We then explore how these changes in technology, along with changes in regulation and global competition, have affected firm boundaries, competition, human resource management, regulation, sources of financing, and the assignment of property rights.
WEEK 1: THE WORLD IS CHANGING. OR IS IT?
- Carl Shapiro and Hal R. Varian, “The Information Economy,” in Information Rules: A Strategic Guide to the Network Economy (Cambridge, Mass.: Harvard University Press, 1998).
- Council of Economic Advisers, “The Creation and Diffusion of the New Economy,” pp. 95–120 in Economic Report of the President (Washington: US Government Printing Office, 2001).
- Yochai Benkler, “Introduction: A Moment of Opportunity and Challenge,” in The Wealth of Networks: How Social Production Transforms Markets and Freedom (New Haven: Yale University Press, 2007).
- Peter G. Klein, Review of Benkler, The Independent Review 13, no. 3 (Winter 2009).
- Kevin Kelly, “New Rules for the New Economy,” Wired, September 1997.
- Hal R. Varian, “A New Economy With No New Economics,” New York Times, January 17, 2002.
WEEK 2: INFORMATION GOODS
- Hal R. Varian, “Markets for Information Goods,” manuscript, April 1998.
- “Knowledge Is Power,” The Economist, September 21, 2000.
WEEK 3: NETWORK EFFECTS
- Stanley J. Liebowitz and Stephen G. Margolis, “Network Externality,” New Palgrave Dictionary of Economics and the Law (London: MacMillan, 1998).
- Douglass Puffert, “Path Dependence,” EH.Net Encyclopedia of Economic and Business History, 2010.
WEEK 4: ECONOMICS OF THE INTERNET
- Peter G. Klein, “Government Did Invent the Internet, But the Market Made It Glorious,”Mises Daily, June 12, 2006.
- Nicholas Economides, “The Economics of the Internet,” in Steven N. Durlauf and Lawrence E. Blume, eds., The New Palgrave Dictionary of Economics, second edition (London: Palgrave Macmillan, 2008).
WEEK 5: INTELLECTUAL PROPERTY, REGULATION, AND PUBLIC POLICY
- Murray N. Rothbard, “Patents and Copyrights,” pp. 745–54 in Man, Economy, and State with Power and Market(Mises Institute, 2004).
- Stephan Kinsella, “The Case Against IP: A Concise Guide.”Mises Daily, September 4, 2009.
- Thomas M. Jorde and David J. Teece, “Innovation, Dynamic Competition, and Antitrust Policy,” Regulation13, no. 3 (Fall 1990).
- Robert Hahn and Scott Wallsten, “The Economics of Net Neutrality,” Economist’s Voice, June 2006.