Internet Economics

About

Internet Economics is the OII’s economics course. The course aims to introduce students to the economics of technology (as a substantive body of knoweldge), and to economic modelling (as a method for studying social phenomena). The focus is on using the tools of economics both to understand social phenomena and to practice better policy and strategy. Along the way, we’ll learn about many of the key issues in the economics of the digital realm: price discrimination, regulation of large tech firms, platform pricing, network effects and market tipping, online auctions, intellectual property and innovation, and consumer search to name but a few. We’ll study the principles that underlie many of the business models and strategies observed in digital markets, and come to understand the rationale for various kinds of common policy intervention.

Throughout this course we will see how economic analysis can be used as a methodological toolset for rigorous thinking about important social issues, and how strong positive and normative policy statements emerge naturally from this foundation. We will also see how this framework has been (and is being) applied to a broad range of topics and questions related to the Internet and technology. No prior knowledge of economics is necessary.

Key Themes

• How does technology challenge existing models of economic behaviour and markets? Example: how does economics cope with digital goods, for which scarcity is not a concern? In what ways does competition online differ from the bricks-and-mortar world?
• 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?
• 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 to ensure the full social potential of the Internet is realised? 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, and what are some standards by which the desirability of an outcome can be assessed? Example: how can markets be designed to foster trust between strangers? How should licenses to transmit data in the radio spectrum be allocated?

Learning Outcomes

At the end of this course students will have:

• 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 work on the economics of the Internet authored by distinguished researchers in the field.