The Effect of Content on Global Internet Adoption and the Global “Digital Divide”

A country’s human capital and economic productivity increasingly depend on the Internet due to its expanding role in providing information and communications. This has prompted a search for ways to increase Internet adoption and narrow its disparity across countries – the global “digital divide.” Previous work has focused on demographic, economic, and infrastructure determinants of Internet access difficult to change in the short run. Internet content increases adoption and can be changed more quickly; however, the magnitude of its impact and therefore its effectiveness as a policy and strategy tool is previously unknown. Quantifying content’s role is challenging because of feedback (network effects) between content and adoption: more content stimulates adoption which in turn increases the incentive to create content. We develop a methodology to overcome this endogeneity problem. We find a statistically and economically significant effect, implying that policies promoting content creation can substantially increase adoption. Because it is ubiquitous, Internet content is also useful to affect social change across countries. Content has a greater effect on adoption in countries with more disparate languages, making it a useful tool to overcome linguistic isolation. Our results offer guidance for policy makers on country characteristics that influence adoption’s responsiveness to content and for Internet firms on where to expand internationally and how to quantify content investments.Internet, technology adoption, economic development, two-sided markets, network effects, technology diffusion, language, content

Pricing of Complementary Goods and Network Effects*

We discuss the case of a monopolist of a base good in the presence of a complementary good provided either by it or by another firm. We assess and calibrate the extent of the influence on the profits from the base good that is created by the existence of the complementary good, i.e., the extent of the network effect. We establish an equivalence between a model of a base and a complementary good and a reduced-form model of the base good in which network effects are assumed in the consumers’ utility functions as a surrogate for the presence of direct or indirect network effects, such as complementary goods produced by other firms. We also assess and calibrate the influence on profits of the intensity of network effects and quality improvements in both goods. We evaluate the incentive that a monopolist of the base good has to improve its quality rather than that of the complementary good under different market structures. Finally, based on our results, we discuss a possible explanation of the fact that Microsoft Office has a significantly higher price than Microsoft Windows although both products have comparable market shares.calibration; monopoly; network effects; complementary goods; software; Microsoft

Quantifying the Benefits of Entry into Local Phone Service,

See http://www.netinst.org/NET_Working_Papers.html #46

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几个星期前，我站在北京一个地铁站外，不断地朝出租车招手，迫切希望能为从外 地来访的友人叫到一辆。 苦等了半个小时后，我依然呆在原地，胳膊已经酸痛，却未能 打到车，甚至有几辆空车也不愿意停下来。最后我们还是不得不选择坐地铁，尽管花时 更

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近日，一则有趣的新闻引起了我的思考。坐落于武汉的一家钢铁企业——武汉钢铁集团（武钢）日前对外宣布，计划投资建立一个年产万头的养猪场。若是一个普通企业也就罢了，然而，武钢是新中国成立后由国家投资建设的第一个特大型钢铁联合企业。人们不禁要问：此举能使武钢从与其本行业完全不相关的多元化产业中获得什么呢？事实上，在跨行业经营问题上，经济学家们早已积累了很多重要的实证研究证据。这些证据表明（至少在美国），涉足不相关产业的多元化经营会损害企业的自身价值，即所谓的“多元化折价”（diversification discount）：产业多元化程度非常高的企业其股票的收益率通常较低 (Besanko等, 2007, Chapter 5; Lang 和 Stulz, 1994)。原作者单位： 长江商学

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