DKE Part 3: Information Econ

Increased opportunities
1. SMEs
2. Large corps use external knowledge resources to give competitive advantage
3. Large corps = Venture Capitalists
Low Barriers to Entry
1. internet reduce costs of entry for startups: >$5000 + labour VS >$250,000 in 90s
2. Open Source Software; Cloud computing, cheap online accounting, legal services
Convergence
1. E-delivery:
  1. Improvement in supply chain mgmt
  2. new ways of doing business
  3. digital disruption
Network Externalities
1. networks -> entre's: Strategic Alliances
2. between Social and Business entres
  1. Ecological Sustainability Innovations
3. Since 1950s shift from large firms innovating to entre econ
4. Complexity & Turbulence of KBE -> greater Uncertainty -> Firms disintegrate to form Networks
5. Cohesion
Aus Start Up Scene
1. E.g. Atlassian, Freelancer.com; Owen Kerr (Pepperstone online forex)
2. Pros
  1. well networked
  2. vibrant
  3. strong success stories
  4. good overseas connections
    1. US, UK, Asia, EU
  5. readily available seed money $100K
  6. Good human capital
3. Cons
  1. lack of venture capital funding
  2. lack of workld-class broadband
  3. little govt. support, policy ,funding
Information Economics
1. study of agents and institutions concerned with the production, communication and consumption of information.
  1. adds information dimension to neoclassical
  2. Information = resource with costs
  3. economics of inquiring communicating and deciding
  4. Info = public good
2. Productivity growth via Innovation not longer hours / higher wages
Processes of Knowledge Production, Diffusion, Storage & Use
1. adsorb a large proportion of resources in the economy
2. knowledge industry: >50% of output related to knowledge activites / processes.
3. +ve externalities
4. Govt finances:
  1. education
  2. media
  3. R&D grants, tax concessions, R&D by govt (CSIRO)
  4. telecomms
  5. WHY?
    1. Public Good, with positive externalities
    2. Avoid Market failure
5. Technology technology results in continuous change
  1. No Equilibrium
6. Info Econ given insigts into:
  1. Lack of efficiency of market mechanisms
  2. public policy (market & govt relations)
Key Features of Information
1. Inexhaustible
2. Accumulative: value enhanced by disemmination; synergy when new info added
3. Intangible but can be embodied in Goods & services
4. public good:
  1. non-rivalrous, indivisible, inexhaustiable
    1. Tech clusters gain from econom of scale (incr. returns).
      1. Comparative advantage of large monpanies in knowledge industries
      2. Networks more attractive, give exponential returns to members
  2. free-rider problems
  3. Problems:
    1. Digital distribution of knowledge goods
      1. Music, News: Moving from physical to digital distribution'
      2. need to overcome disruption by changing business model to adapt
        Piracy
      3. Knowledge resource allocation:
        tech allocated by non-market mechanisms
  4. Non transferrable: Both retain.
    1. Therefore any trd of knowledge incr. stock of knowledge in the economy (Social Benefits)
5. Funded by:
  1. Government (Taxes)
  2. Charity
6. Asymetry
  1. 1. Do Due Diligence
  2. 2. Use laws to force companies to be transparent
  3. 3. Ethics

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DKE Part 3: Information Econ

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