Digital Goods and the New Economy

Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from an Arrow -Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.

The Wealth of Networks: How Social Production Transforms Markets and Freedom

Information, knowledge, and culture are central to human freedom and human development. How they are produced and exchanged in our society critically affects the way we see the state of the world as it is and might be; who decides these questions; and how we, as societies and polities, come to understand what can and ought to be done. For more than 150 years, modern complex democracies have depended in large measure on an industrial information economy for these basic functions. In the past decade and a half, we have begun to see a radical change in the organization of information production. Enabled by technological change, we are beginning to see a series of economic, social, and cultural adaptations that make possible a radical transformation of how we make the information environment we occupy as autonomous individuals, citizens, and members of cultural and social groups.