Internet Economics

About

Are you concerned about the dominance of tech monopolies? Wondering how they ended up with everyone’s data? Not sure whether to trust a seller online? Think innovation should move faster, or that the Internet is full of publishers churning out spam content? Anxious about what AI will mean for competition? Me too—let’s talk about fixing it!

Internet Economics is a course in economics for people who want to combine a rigorous understanding of digital markets with a focus on good policy making. Students will learn how to diagnose when and why digital markets don’t work very well (which turns out to be quite often!) Just as importantly, they will learn about a range of economically-informed policy or business interventions that people use to address these problems.

Here’s our three-step plan:

(1) methodology: learn how economists use models to understand how markets work.

(2) theory: use those tools to rigorously determine exactly which parts of a digital market’s mechanism are prone to failure.

(3) practice: identify interventions to adjust the mechanism so that it works better.

This course will expose students to a wide range of ideas in economics that are useful for understanding the fundamental mechanics of how markets work, and will develop the skills to apply those tools and to access the large literature on digital economics.

Key Themes

• How does technology challenge existing models of economic behaviour and markets? Example: how should firms price digital goods, for which scarcity is not a concern?
• What kinds of features and phenomena are common across online and technology markets and why do these emerge? Example: why are so many online markets dominated by one or two large firms? Can and should we change that?
• What kinds of business models and practices are used by online firms and why? Example: why are so many online services free to use?
• When and how should policy makers intervene in markets? What is the rationale for common forms of statutory or regulatory intervention? Example: why do we issue patents? Why do we subsidise some activities? Why do we sometimes fine firms for “abuse of dominance” or prevent them from merging?
• How should interactions mediated by the Internet be structured? How should markets and online platforms be designed to facilitate good outcomes? Example: how can markets be designed to foster trust between strangers? What kinds of privacy regimes best facilitate communication?

Learning Outcomes

At the end of this course students will have:

• obtained an understanding of important concepts and methodological approaches in economics.
• know how economic analysis can be applied to help understand interaction and exchange in technology markets.
• understand key economic principles underlying policy making and business strategy in the technology context.
• be able to formulate research questions that are amenable to economic analysis and use the tools of economics and game theory to provide answers to them.
• be familiar with important research on the economics of technology.