Essays in Industrial Organization and Information Technology

Chapter 1 studies how consumers’ switching costs affect the pricing and profits of firms competing in two-sided markets such as Apple and Google in the smartphone market. When two-sided markets are dynamic – rather than merely static – I show that switching costs lower the first-period price if network externalities are strong, which is in contrast to what has been found in one-sided markets. By contrast, switching costs soften price competition in the initial period if network externalities are weak and consumers are more patient than the platforms. Moreover, an increase in switching costs on one side decreases the first-period price on the other side. Chapter 2 examines firms’ incentives to invest in local and flexible resources when demand is uncertain and correlated. I find that market power of the monopolist providing flexible resources distorts investment incentives, while competition mitigates them. The extent of improvement depends critically on demand correlation and the cost of capacity: under social optimum and monopoly, if the flexible resource is cheap, the relationship between investment and correlation is positive, and if it is costly, the relationship becomes negative; under duopoly, the relationship is positive. The analysis also sheds light on some policy discussions in markets such as cloud computing. Chapter 3 develops a theory of sequential investments in cybersecurity. The regulator can use safety standards and liability rules to increase security. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only firms, but also consumers to invest in security.

Privacy Tradeoffs in Information Technology Law

The thesis aims to make the dynamics of the tradeoffs involving privacy more visible; both theoretically and in two of the central current policy debates in European data protection law, the right to be forgotten and online tracking. In doing so, it offers an explanation for data protection law from an economic perspective and provides a basis for the evaluation of further data protection measures.

Essays on social networks, altruism and information diffusion

This dissertation consists of three standalone articles that contribute to the economics literature concerning technology adoption, information diffusion, and network economics in one way or another, using a couple of primary data sources from Ethiopia. The first empirical paper identifies the main behavioral factors affecting the adoption of brand new (radical) and upgraded (incremental) bioenergy innovations in Ethiopia. The results highlight the importance of targeting different instruments to increase the adoption rate of the two types of innovations. The second and the third empirical papers of this thesis, use primary data collected from 3,693 high school students in Ethiopia, and shed light on how we should select informants to effectively and equitably disseminate new information, mainly concerning environmental issues. There are different well-recognized standard centrality measures that are used to select informants. These standard centrality measures, however, are based on the network topology---shaped only by the number of connections---and fail to incorporate the intrinsic motivations of the informants. This thesis introduces an augmented centrality measure (ACM) by modifying the eigenvector centrality measure through weighting the adjacency matrix with the altruism levels of connected nodes. The results from the two papers suggest that targeting informants based on network position and behavioral attributes ensures more effective and equitable (gender perspective) transmission of information in social networks than selecting informants on network centrality measures alone. Notably, when the information is concerned with environmental issues.

Innovation in aquaculture. Modeling the adoption and implementation processes of innovations in the Italian aquaculture sector

Since the turn of the century, fisheries have maintained a steady growth rate, while aquaculture has experienced a more rapid expansion. Aquaculture can offer EU consumers more diverse, healthy, and sustainable food options, some of which are more popular elsewhere. To develop the sector, the EU is investing heavily. The EU supports innovative projects that promote the sustainable development of seafood sectors and food security. Priority 3 promotes sector development through innovation dissemination. This doctoral dissertation examined innovation transfer in the Italian aquaculture sector, specifically the adoption of innovative tools, using a theoretical model to better understand the complexity of these processes. The work focused on innovation adoption, emphasising that it is the end of a well-defined process. The Awareness Knowledge Adoption Implementation Effectiveness (AKAIE) model was created to better analyse post-adoption phases and evaluate technology adoption implementation and impact. To identify AKAIE drivers and barriers, aquaculture actors were consulted. "Perceived complexity"—barriers to adoption that are strongly influenced by contextual factors—has been used to examine their perspectives (i.e. socio-economic, institutional, cultural ones). The new model will contextualise the sequence based on technologies, entrepreneur traits, corporate and institutional contexts, and complexity perception, the sequence's central node. Technology adoption can also be studied by examining complexity perceptions along the AKAIE sequence. This study proposes a new model to evaluate the diffusion of a given technology, offering the policy maker the possibility to be able to act promptly across the process. The development of responsible policies for evaluating the effectiveness of innovation is more necessary than ever, especially to orient strategies and interventions in the face of major scenarios of change.