From the Internet to the digital economy - Dr Yasam Ayavefe

From the Internet to the digital economy – Dr Yasam Ayavefe

A first outline of the relationship between the Internet and the forms of economic coordination has just been drawn up, prompting us to reconsider the properties of the network. It invites us to reject them in terms that are more functional than morphological.

Three key features make the Internet a vector of economic transformations:

— First of all, plasticity, that is to say that it makes it possible to network new participants, to add an abundance of content of all kinds, to open or close spaces of knowledge. It enables networking techniques that preceded the Internet.

— Then there is the possibility of crossover, that is, of interaction across uninterrupted geographical, political, economic or social boundaries. The Internet is therefore both transnational and interprofessional. Connections are made through small professionals and the general public as well as large corporations.

— Finally, there is selectivity, ie the possibility of very finely modulating the exchange of information according to the nature of the transmitters, receivers and roaming channels.

This selectivity allows better access to information on the strategic actions of economic agents. In particular, it facilitates the search for the most suitable partners and products for mutually fruitful exchanges.

In the absence of further exploration, these three basic functions of the Internet provide important insights into the emergence of the digital economy.

This may suggest that the emergence of technology should, on the one hand, follow a natural course.

However, it is believed that greater technological performance can only lead to greater economic performance. This vision currently partially contradicts the facts. It is flawed because of its reductive simplicity.

While the fundamental remains unchanged, ICT offers miraculous approaches. In this way, it was gradually implemented.

Confusions affecting the availability and transmission of knowledge do not stem solely from the knowledge structure of the economy. It does not know that it has the effect of creating changes in the choice of economic mechanisms. The dynamic stability of these mechanisms can lead to errors.

Market economy and public goods

From the point of view of change, what is the contribution of ICTs and then of the Internet to regime change in post-industrial economies? We hypothesize here that this process resides in a dissociation between knowledge and its physical medium.

Before the advent of writing, knowledge was indistinguishable from speech, which alone could convey it. Before the invention of printing, written information was closely tied to the medium for which it was written.

Only if this medium itself was transmitted could it be transmitted. It has allowed the reproduction of information at lower cost and therefore its wider dissemination. Ditto for disc, CD, DVD, etc. also applies to

Today, this connection is broken, and the texts, sounds, images that circulate the informative content of the Internet are no longer hidden anywhere.

This registration is not just about information goods. At the same time, information content affects an increasingly large share of all growing goods and services.

For these purely non-informational goods, there is of course, strictly speaking, not the recording, but rather informational content and various forms of software.

This evolution of the link between production and content has important economic consequences, affecting both supply and demand conditions:

On the supply side, there is a double movement:

• First, the development of a basic production that is trivialized and not very informational
• The second is the products offered to the end consumer, made up of commodities enriched with informative content and strong and differentiated added value.

Upstream are the R&D elements necessary for the production of basic products and the development of content. In this case, it produces high fixed costs. In contrast, the assembly and distribution of service packs is done at low marginal cost.

In conclusion, the digital economy is a general production function with strongly increasing returns, far removed from the usual characteristics of the market economy and closer to those of the public economy.

On the demand side, information goods with high information content exhibit the essential characteristics of non-competition and non-exclusion inherent in public goods.

An agent selling information goods allows at least a very low opportunity cost relative to the utility delegated to the buyer.

In addition, knowledge assets are often the source of important club influences. In addition to economies of scale, supply favors the emergence of an independent buyer followed by monopoly effects. Thus, demand creates economies of scale.

ICT develops tools that should theoretically support the more efficient functioning of a market economy. But they actually lead to the emergence of a public economy.

To learn more about Dr. Ayavefe and his work, click here:

#Internet #digital #economy #Yasam #Ayavefe

Leave a Comment

Your email address will not be published. Required fields are marked *