Abstract—The architecture of the Internet is based on a number of principles, including the self-describing datagram packet, the end-to-end arguments, diversity in technology and global addressing. As the Internet has moved from a research curiosity to a recognized component of mainstream society, new requirements have emerged that suggest new design principles, and perhaps suggest that we revisit some old ones. This paper explores one important reality that surrounds the Internet today: different stakeholders that are part of the Internet milieu have interests that may be adverse to each other, and these parties each vie to favor their particular interests. We call this process “the tussle.” Our position is that accommodating this tussle is crucial to the evolution of the network’s technical architecture. We discuss some examples of tussle, and offer some technical design principles that take it into account. Index Terms—Competition, design principles, economics, network architecture, trust, tussle. I.

This paper investigates the role of social learning in the diffusion of a new agricultural technology in Ghana. We use unique data on farmers ’ communication patterns to define each individual’s information neighborhood, the set of others from whom he might learn. Our empirical strategy is to test whether farmers adjust their inputs to align with those of their information neighbors who were surprisingly successful in previous periods. We present evidence that farmers adopt surprisingly successful information neighbors ’ practices, conditional on many potentially confounding factors including common growing conditions, credit arrangements, clan membership, and religion. The relationship of these input adjustments to experience further supports their interpretation as resulting from social learning. In ad-The authors have benefittedfromtheadviceofRichardAkresh,Federico Bandi, Alan Bester, Dirk Bergemann,

This paper estimates the importance of network effects in the market for Yellow Pages. I estimate three simultaneous equations: consumer demand for usage of a directory, advertiser demand for advertising and a publisher’s first-order condition (derived from profitmaximizing behavior). Estimation shows that advertisers value consumer usage and that consumers value advertising, implying a network effect. I find that internalizing network effects would significantly increase surplus. As an application, I consider whether the market benefits from monopoly (which takes advantage of network effects) or oligopoly (which reduces market power). I find that a more competitive market is preferable.

In this paper we examine the importance of local spillovers—such as network externalities and learning from others—in the diffusion of home computers. We use data on 110,000 U.S. households in 1997. Controlling for many individual characteristics, we find that people are more likely to buy their first home computer in areas where a high fraction of households already own computers or when a large share of their friends and family own computers. Further results suggest that these patterns are unlikely to be explained by common unobserved traits or by area features. When looked at in more detail, the spillovers appear to come from experienced and intensive computer users. They are not associated with the use of any particular type of software but do seem to be highly tied to the use of e-mail and the Internet, consistent with computers being part of an information or communication network. I.

This paper considers the incentive for non-price discrimination of a monopolist in an input market who also sells in an oligopoly downstream market through a subsidiary. Such a monopolist can raise the costs of the rivals to its subsidiary though discriminatory quality degradation. I find that the monopolist always, even when it is cost-disadvantaged, has the incentive to raise the costs of the rivals to its subsidiary in a discriminatory fashion, but does not have the incentive to raise costs to the whole downstream industry including its subsidiary. Moreover, increasing rivals' costs nullifies the effects of traditional imputation floors, and prompts the creation of imputation floors that account for the artificial costs imposed on downstream rivals. The results of this paper raise concerns about the potentially anti-competitive effects of entry of local exchange carriers in long distance service. The results may also suggest the imposition of certain unbundling and technical specif...

This article reviews the growing body of research on electronic commerce from the perspective of economic analysis. It begins by constructing a new framework for understanding electronic commerce research, then identifies the range of applicable theory and current research in the context of the new conceptual model. It goes on to assess the state-of-the-art of knowledge about electronic commerce phenomena in terms of the levels of analysis here proposed. And finally, it charts the directions along which useful work in this area might be developed. This survey and framework are intended to induce researchers in the field of information systems, the authors’ reference discipline, and other areas in schools of business and management to recognize that research on electronic commerce is business-school research, broadly defined. As such, developments in this research area in the next several years will occur across multiple business-school disciplines, and there will be a growing impetus for greater interdisciplinary communication and interaction.

I develop a general theory of monopoly pricing of networks. Platforms use insulating tariffs to avoid coordination failure, implementing any desired allocation. Profit-maximization distorts in the spirit of Spence (1975) by internalizing only network externalities to marginal users. Thus the empirical and prescriptive content of the popular Rochet and Tirole (2006) model of two-sided markets turns on the nature of user heterogeneity. I propose a more plausible, yet equally tractable, model of heterogeneity in which users differ in their income or scale. My approach provides a general measure of market power and helps predict the effects of price regulation and mergers. JEL: Keywords: The pricing problems of payment and advertising platforms have much in common. Both seek to attract two distinct groups of users: AmEx needs cardholders and merchants while the New York Times recruits readers and advertisers. Because the value each group takes from using these services depends on the size of the other side of the market, the platform’s pricing and marketing strategies to each group are closely linked. Therefore policy directed at alleviating distortions caused by market power in these industries must take account of how interventions on one side affect welfare and platform behavior on the other. ∗ Harvard Society of Fellows and Toulouse School of Economics: 78 Mount Auburn Street, Cambridge, MA 02138, weyl@fas.harvard.edu. This paper was split off as one part of a previous working paper “Monopolies in Two-Sided Markets: Comparative Statics and Identification”. I am grateful to el Ministerio de Hacienda de Chile and the Centro de Investigación Económica at the Instituto Tecnológico Autónomo de México (CIE-ITAM) which hosted me on a visit while I conducted parts of this research. The Harvard Milton Fund supported the last stage of this project and financed the

The paper discusses three key economic problems raised by the emergence of Open source: motivation, co-ordination, and diffusion.

This paper introduces the concept of netchain analysis. A netchain is a set of networks comprised of horizontal ties between firms within a particular industry or group, which are sequentially arranged based on vertical ties between firms in different layers. Netchain analysis interprets supply chain and network perspectives on inter-organizational collaboration with particular emphasis on the value creating and coordination mechanism sources. We posit that sources of value and coordination mechanisms correspond to particular and distinct types of interdependencies: pooled, sequential, and reciprocal. It is further argued that the recognition and accounting of these simultaneous interdependencies is crucial for a more advanced understanding of complex inter-organizational relations. The paper concludes with an analysis of a set of netchain configuration examples, including buyer-supplier relationships, information technology induced inter-organization collaborations, and the introduction of the “macrohierarchy” organization structure. Key words Network, supply chain, value chain, interdependence, cooperative strategy. 1 We thank the h elpful comments by two anonymous referees. All remaining errors and omissions are our own. 1.

We show how the financial market valuation of firms can be used to estimate the intangible costs and benefits of computer capital and we present several new empirical results based on this model. Using eight years of data for 820 non-financial firms in the United States, we find that an increase of one dollar in the quantity of computer capital installed by a firm is associated with an increase of about ten dollars in the financial markets ’ valuation of the firm. Other forms of capital do not exhibit these high valuations. Our model suggests that adjustment costs and intangible assets may provide an explanation for the high market valuation found for computers in this study as well as the high returns found for computer capital in firm-level productivity studies. Costly investments in software, training and organizational transformations that accompany computer investments can be regarded as creating intangible assets. These intangible assets do not appear on firms ’ conventional balance sheets but they can produce both higher market valuations and apparent “excess ” returns. The empirical evidence suggests that the vast majority of the costs and benefits of computerization are embodied in otherwise unobserved intangible assets.