Economics of Network Industries

Syllabus

403 BA

ECONOMICS OF NETWORK INDUSTRIES

Unit 1

Network Economics: Introduction, Information Goods and Services, Traditional Goods and Services, Overview of  Network Industries, Demand Side Economies of Scale - Network Externality, Supply Side Economics of Scale - Increasing  Returns. Systems Effect in Information Industry, Network Effects in Physical (Telecommunication) and Virtual (Systems) Networks; Internalizing the Network Externality – Gateways, Adapters and Standards.                                              (7+2)

Unit 2

Analyzing the Hardware & Software Industry: Analyzing the Hardware Industry - Hardware Compatibility, Network Externalities Approach, the Components Approach. Analyzing the Software Industry - Principles of Software Production, Determinants of Software Variety, Software Variety Under Hardware Competition, Software Variety and Partial Compatibility, Software Piracy, Software Pricing and Market Segmentation.                                                                   (7+2)

Unit 3

Technology Advance and Standardization: New Technology Adoption – Static Approach, Technology Revolutions – Dynamic Approach, Patents, Licensing and Standardization in Network Industries.

Unit 4

Industry Reviews - I: Economics of the Telecommunication Industry, Interconnections, Broadcasting and Cable Television, Spectrum Allocation, Digital Convergence, Markets for Information – Information Reproduction, Economics of Libraries, Pricing Information Goods.                                                                                                                      (7+2)

Unit 5

Industry Reviews – II: Banks and Money – Switching Costs and Competition, ATMs, Media of Exchange as Networks. Airline Industry – Network Structure and Network Economies, Deregulation and Entry, Code Sharing Agreements. Social Intercation – Status Seeking versus Conformism, Conformity, Vanity and Price Competition, Economics of Entertainment Places, Gifts. Languages as Networks, Religious Affiliations as Networks.                                               (7+2)