Digital goods and the new economy

Danny Quah

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from an Arrow -Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.

Keywords: aspatial; emergence; idea; information; innovation; intellectual asset; Internet; knowledge; Open Source; weightless economy (search for similar items in EconPapers)
JEL-codes: D60 L12 O30 R12 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:2236

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