Economics 139A: Economics of e-Commerce

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University of California at Santa Cruz
Term Autumn 2007
Day/time Tu Th 4:00--5:45pm
Classroom Kresge 237
Home page http://people.ucsc.edu/~sturnbul/Econ139A/
   
Instructor Stephen J Turnbull
Office 2 Engineering 469
Phone ext. 9-5556
E-mail sturnbul@ucsc.edu
Home page http://people.ucsc.edu/~sturnbul

An applied course in microeconomics at the intermediate level, Economics 139A will emphasize equilibrium interactions among firms and consumers. Time permitting, strategic considerations for managers will also be discussed.

This course aims to provide an introductory analysis of the broad spectrum of issues affecting commercial uses of the Internet, the World Wide Web, and related information and communication infrastructures. We will use the analytical tools of economics to examine market structure, pricing, quality, intellectual property rights, security, business strategy, electronic payments and currencies, and public policy implications. In sum, this can be characterized as an applied microeconomics course, and students are expected to have mastery of material from intermediate microeconomics (Econ 100A at UCSC).

Evaluation standards will be confirmed by March 20, but probably will be similar to past offerings of this course. That includes one or two midterms, up to five substantial homework assignments, randomly timed pop quizzes, and a final report.

Course prerequisites are Econ 100A or Econ 100M.

See http://gazos.ucsc.edu/soc/index.cfm for tentative Section meeting times and locations. The lecturer's schedule (including office hours) is announced on his home page.

Textbooks and resources

The required texts are

The Economics of e-Commerce and the Internet, by Edward J. Deak, Thomson South-Western, 2004.

The Innovator's Dilemma, by Clayton M Christensen, Collins Business Essentials, 2000.

They are available at Bay Tree bookstore. (The second book is not strictly speaking required, but it will be referred to frequently, is more strategically oriented and directly useful to managers, and fairly inexpensive.) An unpublished text similar to the required text is

Electronic Commerce: Economics and Strategy, by Nirvikar Singh: draft book manuscript, Prentice Hall (forthcoming): available online in pdf format at http://people.ucsc.edu/~boxjenk/#_Electronic_Commerce (each chapter has an individual link).

The following text is strongly recommended for anyone interested in e-Commerce and the Internet, and would be a useful companion to the required texts. However, it will not be used directly in the course. (It is fairly inexpensive, as well.)

Information Rules: A Strategic Guide to the Network Economy, by Carl Shapiro and Hal Varian, Harvard Business School Press, 1999.

Alternative and supplementary texts include:

The Economics of Electronic Commerce, by Andrew B. Whinston, Dale O. Stahl, and Soon-Yong Choi: Macmillan Technical Publishing, 1997.

The Economic and Social Impact of Electronic Commerce, published by the Organisation for Economic Cooperation and Development (OECD), 1999.

The last is perhaps interesting as a typical example of the kind of work done by many government economists and economic consultancies.

Supplementary required readings include The Economist, or a comparable news source. These readings will be referred to in homework assignments. Additional optional readings may be placed on reserve in the Science Library, and/or posted on the class website http://people.ucsc.edu/~sturnbul/Econ139A/. (A mirror of the class home page will be available at http://turnbull.sk.tsukuba.ac.jp/UCSC/Econ139A/.)

Lecture Schedule

In the readings, EeCI refers to Deak, The Economics of e-Commerce & the Internet, and TID to Christensen, The Innovator's Dilemma. The numbers are chapter references. There is no particular association with topics and readings intended. Readings should be at least skimmed before lecture; this will be enforced by pop quizzes.

This schedule is subject to substantial revision.

Week, dates Topics Readings
  1. Apr 1, 3
Organizational matters; Introduction: Electronic commerce and the new economy; Static microeconomic models. EeCI 1, 2
  1. Apr 8, 10
Dynamic microeconomic models; Economic principles review: Firms and households TID Intro, 1
  1. Apr 15
Technology; New Types of Firms and Industries; Changing Nature of Firms and Markets EeCI 3
3-4. Apr 17, 22 Review: Market organization and law; Measuring structure (concentration); Strategic entry barriers EeCI 4, 5, 8
  1. Apr 24
Legal issues of managing intellectual property rights EeCI 6, 7
  1. Apr 29, May 1
Marketing and selling, lock-in strategies EeCI 9
  1. May 6, 8
Customization and pricing strategies EeCI 10, 11
  1. May 13, 15
Disruptive innovation and organization; Open source software as a disruptor TID 5, 6
  1. May 20, 22
B2B: the e-commerce you don't see EeCI 13, 16
  1. May 27, 29
Policy and social implications; Global issues; Future directions EeCI 17-20 (selections)
  1. Jun 3, 5
Special Topics, Final Paper discussion  
Jun 12** Final Exam 8:00--11:00pm (if offered)

+ indicates interactive game date, * indicates homework due date, ** indicates exam dates