The economics of the Internet: an overview

Johannes M. Bauer and Michael Latzer

Chapter 1 in Handbook on the Economics of the Internet, 2016, pp 3-20 from Edward Elgar Publishing

Abstract: In the Internet economy many of the theoretical assumptions and historical observations upon which economics rests need to be reexamined. Economics built a very successful research program by focusing on the choices and behavior of rational individual decision-makers under conditions of scarcity. In this highly stylized framework, eventually increasing incremental costs, decreasing marginal utility and resource constraints result in negative feedback that moves economic processes toward equilibrium states. The rigorous analysis of these equilibria at the micro and macro level was a major achievement of economics. In an economy built around digital technology some of these conditions change fundamentally. Scale economies, interdependencies, and abundance are pervasive and call for analytical concepts that augment the traditional approaches.

Keywords: Economics and Finance; Innovations and Technology (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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