Introduction

The economic analysis of the digital economy has been a rapidly developing research area for more than a decade. Through authoritative examination by leading scholars, this handbook takes a closer look at particular industries, business practices, and policy issues associated with the digital industry. The volume offers an up-to-date account of key topics, discusses open questions, and provides guidance for future research. It offers a blend of theoretical and empirical works that are central to understanding the digital economy.

Structure and Themes

The chapters are presented in four sections, corresponding with four broad themes:

• 1) Infrastructure, standards, and platforms;
• 2) The transformation of selling, encompassing both the transformation of traditional selling and new, widespread application of tools such as auctions;
• 3) User-generated content;
• 4) Threats in the new digital environment.

Section 1: Infrastructure and Platforms

The first section covers infrastructure, standards, and various platform industries that rely heavily on recent developments in electronic data storage and transmission, including software, video games, payment systems, mobile telecommunications, and B2B commerce.

Section 2: Transformation of Selling

The second section takes account of the reduced costs of online retailing that threatens offline retailers, widespread availability of information as it affects pricing and advertising, digital technology as it allows the widespread employment of novel price and non-price strategies (bundling, price discrimination), and auctions.

Section 3: User-Generated Content

The third section addresses the emergent phenomenon of user-generated content on the Internet, including the functioning of social networks and open source.

Section 4: Threats in the Digital Environment

The fourth section discusses threats arising from digitization and the Internet, namely digital piracy, privacy, and security concerns.