October 9, Comparing the distribution of canceled quote lifetimes to those that result in trade executions helps reveal the extent to which the markets are dominated by individual quotes that are canceled so fast that they cannot be accessed. The data show that the vast majority of individual quotes can be accessed by at least some market participants before they are canceled. October 9, An accurate assessment of quote lifetimes measures the speed of markets and how it may change in response to new products, technologies, market practices or regulations.
There were three back-to-back investment shocks during this period: These events stimulated significant investment in information technology in a number of industries, leading to a very rapid expansion of IT-producing industries.
Note how closely the two indices track each other up until January ofat which point NASDAQ takes off on its roller coaster ride. Eventually it came crashing back, but note that the total return over the eight years depicted in the two indices is about the same.
As of Julyit is about 17 percent. Despite the dramatic run-up and run-down in technology stocks, it is clear that technology has played, and will continue to play, a significant role in the economy.
The increase in productivity growth in the late s is often attributed to the investment in IT during the first half of that decade. If this is true, then it is very good news, since it means we have yet to reap the benefits of the IT investment of the late s.
Outline This paper is concerned with the relationship between technology and market structure. High-technology industries are subject to the same market forces as every other industry. However, there are some forces that are particularly strong in high-tech, and these will be the primary concern of this survey.
But forces that were relatively minor in the industrial economy turn out to be critical in the information economy. Second-order effects for industrial goods are often first-order effects for information goods.
Take, for example, cost structures. Constant fixed costs and zero marginal costs are common assumptions for textbook treatments, but rarely observed for physical products since there are capacity constraints in nearly every production process.
But for information goods, this cost structure is very common--indeed it is the baseline case.
This is true not just for pure information goods, but even for physical goods like chips. A chip fabrication plant can cost several billing dollars to construct and outfit; but producing an incremental chip only costs a few dollars.
It is rare to find cost structures this extreme outside of technology industries. The effects we discuss involve pricing, switching costs, scale economies, transactions costs, and system coordination, and contracting. Each of these topics has been extensively studied in the economics literature.
I do not pretend to offer a complete survey of the relevant literature, but will try to refer to particularly significant contributions and other more comprehensive surveys. The intent is to provide an overview of the issues for an economically literate, but non-specialist audience.
For a step up in technical complexity, but with more emphasis on business strategy, I can recommend the survey of network industries in the Journal of Economic Literature consisting of articles by Katz and ShapiroBesen and JohnsonLeibowitz and Margolisand the book by Shy For a step down in technical complexity, I can recommend Shapiro and Varian a.
Differentiation of products and prices Information technology allows for fine-grained observation and analysis of consumer behavior.
This allows for various kinds of marketing strategies that were previously extremely difficult to carry out, at least on a large scale. This section will review some of the economic effects that arise from the ability to use more effective price discrimination.
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In a perfectly competitive market economy, business failures can benefit society by causing The market structure of the computer industry. Has become more competitive over time. market structure. The goal of this paper is to understand both the long continuity and the recent change within the same analytical framework.
We look at the overall computer industry and its segments in distinct but linked parts of the analysis. For the segments, the relevant issues are ones of concentration and persistence in market structure. The Structure of the Computer Industry. It also examines the impact of the PC revolution on the market structure of computer manufacturing and software development.
Additionally, it describes. Pricing Strategies as they Relate to Market Structures There are many smartphone players in the cellular phone industry. When considering hardware manufacturers there too numerous to count which in and of itself implies that the industry operates in a perfect competition.