Digital Economic Dynamics: Innovations, Networks and by Paul J.J. Welfens, Mathias Weske

By Paul J.J. Welfens, Mathias Weske

This booklet analyzes the dynamics and affects of software program improvement and discusses new institutional and fiscal adjustments within the context of electronic industry economies. Regulatory methods in OECD international locations are in comparison and state experiences evaluated with admire to innovation and welfare features. The booklet in addition examines telecommunications legislation of fastened line networks, cable television and cellular communications. additionally discusses the function of ecu framework law and problems with marketplace energy.

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2. Mobile and fixed network density in selected countries B1993 • 1995 02000 O2001 • 2002 B2003 5 0,00 0,10 0,20 0,30 0,40 0,60 0,60 0,70 0,80 Source: ITU (2004) Fig. 3. Total share of mobile and fixed networks in selected countries 0,90 1,00 34 Paul JJ. Welfens =^rn ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ 1 ^ 1 3=1 2. EU25 ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ _ ^ ^ ^ ^ ^ ^ ^ ^ i ^ • 1995 1 D2000 D2001 • 2002 Japan Q2003 '^"»"""j United States 0,0 ! 1 1 0,2 0,4 0,6 1r"" 0,8 1,0 1,2 1,4 1,6 1,8 2,0 Source: ITU (2004) Fig.

The assumptions of the HITCH-SWEEZY model are rather specific and only empirical analysis can tell whether the reality in fixed-line telephony indeed is represented by the assumed type of asymmetric behavior - a variant of "followthe-leader" strategy. In the model there is an asymmefrical interdependency under oligopoly as there is one dominant firm and many relatively small competitors: If there is price reduction of the dominant supplier 1 the other firms will follow, which makes part of the effective demand curve less price elastic (steeper than a Digital Social Market Economy - Towards a New Economic System 47 normal demand curve); the arch below the current equilibrium price is rather inelastic.

A relative fall of international telecommunications prices will stimulate internationalization of digital services as will strong competition in local access markets, in particular in DSL and other broadband segments; cheaper local access facilitates the expansion of internet service providers. The internet plays a key role in the World Simimit on the Information Society (WSIS) which is long run project under the auspices of ITU. Digital Social Market Economy - Towards a New Economic System ( WTO EU Regulatory Framework j Trade National Regulatory Authority Country I Universal Services Voice Telephony and Value Added Services National Regulatory Authority Country 11 Voice Telephony and Value Added Services Universal Services Domestic Market Access Local Calls Long Distance Calls Internet Long Distance Calls Internet Y ICANN/ YV ITU / Fig.

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