Economics of Information Technology

This is an overview of economic phenomena that are critical for high-technology industries. Topics covered include personalization of products and prices, versioning, bundling, switching costs, lock-in, economies of scale, network effects, standards, and systems effects. Most of these phenomena are present in conventional industries, but they are particular important for technology-intensive industries. I provide a survey and review of recent literature and examine the implications of these phenomena for corporate strategy and public policy. ∗This is the Raffaele Mattioli Lecture, delivered at Bocconi University, Milano, Italy, on November 15-16, 2001. It is based, in part, on the paper I delivered at the Federal Reserve Bank of Kansas City Jackson Hole Symposium, August 2001. Research support from NSF grant 9979852 and is gratefully acknowledged, as are helpful comments by Erik Brynjolfsson and Kevin Murphy. Email for comments: [email protected].