Essays on the economics of telecommunications and digital business
- Autores: Andres Hervas-Drane
- Directores de la Tesis: Ramón Casadesus-Masanell (dir. tes.), Francesc Trillas (dir. tes.)
- Lectura: En la Universitat Autònoma de Barcelona ( España ) en 2009
- Idioma: español
- Tribunal Calificador de la Tesis: Xavier Vives (presid.), David Pérez Castrillo (secret.), Neil Rickman (voc.)
- Materias:
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- Resumen
This Thesis applies economic modeling to selected topics in telecommunications regulation and electronic commerce. The Thesis is organized in three chapters, and analyzes the regulation of broadband infrastructure in the European Union, the implications of peer-to-peer file sharing for the digital content marketplace, and the impact of recommender systems on the concentration of sales in artistic markets.
The first chapter focuses on the regulation of telecommunications infrastructure in the European Union. Incumbent telecommunications operators control the bottleneck infrastructure required to provide broadband services, and regulators have proposed the implementation of functional separation measures to foster competition in certain market segments. Functional separation is a structural remedy aimed to separate incumbents' infrastructure management from retail operations. We present a simple model to evaluate the quality-wise strategy of an incumbent telecommunications operator. The incumbent is vertically integrated and serves a wholesale market under a regulated price cap. We show that it is always profitable to foreclose the market by degrading the wholesale quality supplied to competitors, and this result is more general than those previously reported in the literature. We then analyze functional separation and show that it better aligns supply-side incentives with those of consumers. Our analysis suggests that functional separation exhibits good properties for broadband markets under wholesale regulation.
The second chapter analyzes peer-to-peer (p2p) file sharing, a disruptive application for broadband Internet that facilitates the unauthorized distribution of copyrighted material. A stylized model of p2p file sharing is presented, based on the underlying properties of the network and the incentives of participants. We show why participants contribute to the network and characterize its performance. We then study the competitive interaction between alternative models of digital content distribution. We analyze the optimal strategy of a profit-maximizing firm that offers content online at positive prices in presence of the file sharing network. We characterize the size of the p2p network as a function of the firm's pricing strategy, and show that the firm may be better off setting high prices, allowing the network to survive, and that the p2p network may operate more efficiently in the presence of the firm than in its absence. We discuss the implications for content providers in the emerging market for digital information goods.
The third chapter turns to online retailing and the impact of recommender systems. This chapter contributes to the debate on how online retailing will affect the concentration of sales. It could reinforce a blockbuster culture if it increases concentration, but if concentration decreases then cultural variety may flourish. We present a model to analyze the impact of personalized recommendations on sales concentration. Consumers face a search problem to locate their preferred products among an assortment supplied by a monopolist. We show that product evaluations prior to purchase and the exchange of word of mouth recommendations between consumers arise endogenously, increasing firm profits and the concentration of sales. To evaluate the impact of a recommender system in the market, we introduce a mechanism that matches consumers with similar preferences in the recommendations exchange. We analyze how the firm profits from this technology and how it affects concentration. Our findings suggest that recommender systems and other mechanisms that facilitate consumer taste matching can reduce the concentration of sales.
