Skip to main content
SpringerLink
Log in
Book cover

Escaping Satiation pp 139–162Cite as

The economic contribution of information technology: Towards comparative and user studies

  • Conference paper

  • 215 Accesses

Abstract

By what process does technical change in information technology (IT) increase economic welfare? How does this process result in increases in welfare at different rates in different countries and regions? This paper considers existing literature on measuring the economic benefits from information technology, emphasizing comparative issues and user studies. Following Bresnahan and Trajtenberg (1995), we call the invention associated with customizing the technological frontier to the unique needs of users in particular regions “co-invention”, placing emphasis on understanding how its determinants vary across users in different regions. We develop a framework for understanding the processes behind valuecreation, demand-side heterogeneity and co-inventive activity. Then we discuss why these processes make measuring the welfare benefits from advances in information technology particularly difficult. We highlight the metrics currently available for measuring the economic pay-out of the IT revolution and identify which of these vary meaningfully in a comparative regional context. Finally, we finish with observations about further areas of research.

We thank the editor and an anonymous referee for comments. The OECD provided funding. Correspondence to: S. Greenstein

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Ames E, Rosenberg N (1984) Technological change in the machine tool industry, 1840–1910. In: Rosenberg N (ed) Perspectives on technology, 2nd edn. Cambridge University Press, Cambridge

    Google Scholar 

  • Antonelli C (1998) Localized technological change, new information technology and the knowledgebased economy: the European evidence. Journal of Evolutionary Economics 8(2): 177–198

    Article  Google Scholar 

  • Bailey MN, Gordon RJ (1988) The productivity slowdown, measurement issues and the explosion of computer power. Brookings Papers on Economic Activity 19(2): 347–420

    Article  Google Scholar 

  • Barras R (1990) Interactive innovation in financial and business services. Research Policy 19(3): 215–237

    Article  Google Scholar 

  • Berndt ER, Griliches Z (1995) Econometric estimates of price indexes for personal computers in the 1990’s. Journal of Econometrics

    Google Scholar 

  • Boschma RA, Lambooy JG (1999) Evolutionary economics and economic geography. Journal of Evolutionary Economics 9 (4): 411–429

    Article  Google Scholar 

  • Bresnahan TF (1987) Measuring the spillover from technical advance: mainframe computer in financial services. American Economic Review March: 742–755

    Google Scholar 

  • Bresnahan TF (1999) The changing structure of innovation in computing. In: Eisenach JA, Lenard TM (eds) Competition, convergence and the Microsoft monopoly. Kluwer, Boston, MA

    Google Scholar 

  • Bresnahan TF, Gordon RJ (1997) The economics of new goods: an introduction. In: Bresnahan TF, Gordon RJ (eds) The economics of new goods. Proceedings of a Meeting of the Conference on Research in Income and Wealth. University of Chicago Press, Chicago

    Chapter  Google Scholar 

  • Bresnahan TF, Greenstein S (1995) The competitive crash in large-scale commercial computing. In: Landau R, Rosenberg N, Taylor T (eds) Growth and development: the economics of the 21st century. Stanford University Press, Stanford, CA

    Google Scholar 

  • Bresnahan TF, Greenstein S (1997) Technical progress and co-invention in computing and in the use of computers. Brooking Papers on Economics Activity: Microeconomics, pp 1–78

    Google Scholar 

  • Bresnahan TF, Greenstein S (1999) Technological competition and the structure of the computer industry. Journal of Industrial Economics

    Google Scholar 

  • Bresnahan TF, Malerba F (1997) Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry. In: Nelson R, Mowery D (eds) Sources of industrial leadership. Cambridge University Press, Boston, MA

    Google Scholar 

  • Bresnahan TF, Saloner G (1996) Large firms’ demand for computer products and services: competing market models, inertia, and enabling strategic change. In: Yoffie DB (ed) Colliding worlds: the merging of computers, telecommunications, and consumer electronics. Harvard University Press, Cambridge, MA

    Google Scholar 

  • Bresnahan TF, Stern S, Trajtenberg M (1997) Market segmentation and the source of rents from innovation: personal computeres in the late 1980s. Rand Journal of Economics 28: s17-s44

    Article  Google Scholar 

  • Bresnahan TF, Trajtenberg M (1995) General purpose technologies: engines growth? Journal of Econometrics 65 (1) : 83–108

    Article  Google Scholar 

  • Brynjolfsson E (1996) The contribution of information technology to consumer welfare. Information Systems Research

    Google Scholar 

  • Brynjolfsson E, Hitt L (1996) Paradox lost? Firm-level evidence on the returns to systems spending. Management Science 42(4): 541–558

    Article  Google Scholar 

  • Brynjolfsson E, Hitt L (1997) Information technology as a factor of production: the role of differences among firms. Mimeo, MIT

    Google Scholar 

  • Chai A (1996) Cyber stocks: an investor’s guide to internet companies. Hoovers Business Press, Austin, TX

    Google Scholar 

  • Clemente P (1998) The state of the net: the new frontier. McGraw-Hill, New York

    Google Scholar 

  • Crandall RW, Waverman L (1995) Talk is cheap: the promise of regulatory reform in North American telecommunications. The Brookings Institute, Washington, DC

    Google Scholar 

  • David PA (1990) The dynamo and the computer: an historical perspective on T. The American Economic Review 80(2): 355–361

    Google Scholar 

  • Dulberger ER (1989) The application of a hedonic model to a quality adjusted price index for computer processor. In: Jorgenson D, Landau R (eds) Technology and capital formation. MIT Press, Cambridge, MA

    Google Scholar 

  • Dulberger ER (1993) Sources of price decline in computer processors: selected electronic components. In: Foss MF, Manser ME, Young AH (eds) Price measurements and their uses. University of Chicago Press, Chicago, IL

    Google Scholar 

  • Estabrooks M (1995) Electronic technology, corporate strategy, and world transformation. Quorum Books, Westport, CN

    Google Scholar 

  • Flamm K (1989) Targeting the computer, government support and international competition. Brookings Institute. Washington, DC

    Google Scholar 

  • Flamm K (1998) Digital convergence? The settop box and the network computer. In: Eisenach JA, Lenard TM (eds) Competition, convergence and the Microsoft monopoly. Kluwer, Boston, MA

    Google Scholar 

  • Friedman AL, Cornford D (1989) Computer systems development: history, organization, and implementation. Wiley, Chichester New York

    Google Scholar 

  • Gandal N (1994) Hedonic price indexes for spreadsheets and an empirical test for network externalities. RAND Journal of Economics 25(1): 741–762

    Article  Google Scholar 

  • Goolsbee A (1999) In a world without borders: the impact of taxes on internet commerce. Mimeo, University of Chicago

    Google Scholar 

  • Goolsbee A (1999) Evidence of learning and network externalities in the diffusion of home computers. Mimeo, University of Chicago

    Google Scholar 

  • Goolsbee A, Klenow P (1999) Evidence of learning and network externalities in the diffusion of home computers. Mimeo, University of Chicago

    Google Scholar 

  • Gordon RJ (1989) The postwar evolution of computer prices. In: Jorgenson DW, Landau R (eds) Technology and Capital Formation. MIT Press, Boston, MA

    Google Scholar 

  • Gordon RJ (2000) Does the new economy measure up to great inventions of the past? NBER Working Paper 7833

    Book  Google Scholar 

  • Greenstein S (1996) From super-minis to super computers: estimating surplus in the computing market. In: Bresnahan TF, Gordon RJ (eds) The economics of new goods, pp. 329–362. University of Chicago Press, Chicago

    Google Scholar 

  • Greenstein S (1998) Universal service in the digital age: the commercialization and geography of US internet access. In: Hurley D, Keller J (eds) The impact of the internet on communications policy. MIT Press, Boston, MA

    Google Scholar 

  • Greenstein S, Spiller P (1997) Estimating the welfare effects of digital infrastructure. NBER Working Paper 5770

    Google Scholar 

  • Greenstein S, Lizardo M, Spiller P (1997) The evolution of the distribution of advanced large scale information infrastructure the United States. NBER Working Paper #5929

    Google Scholar 

  • Griliches Z (1957) Hybrid corn: an exploration in the economics of technological change. Econometrica 25(4): 501–522

    Article  Google Scholar 

  • Hausman J (1997) Cellular telephone, new products and the CPI. NBER Working Paper 5982

    Google Scholar 

  • Helpman E (1998) General purpose technologies and economic growth. MIT Press, Boston, MA

    Google Scholar 

  • Hendel I (1995) Estimating multiple-discrete choice models: an application to computerization returns. Technical working paper no 168, NBER

    Google Scholar 

  • Hoover’s (1997) Hoover’s guide to computer companies. Hoovers Business Press, Austin, TX

    Google Scholar 

  • Hubbard T (1998) Why are process monitoring technologies valuable? The use of trip recorders and electronic vehicle management systems in the trucking industry. Mimeo, University of Chicago

    Google Scholar 

  • ITI: Information Technology Industry Council (1997) Information technology industry databook 1960–2001. ITI, Washington, DC

    Google Scholar 

  • International Data Corporation (1995) European information technology observatory 95. EggebrechtPresse KG, Mainz (Germany)

    Google Scholar 

  • Jimeniz E, Greenstein S (1998) The emerging internet retailing market as a nested diffucsion process. International Journal of Innovation Management 2(3)

    Google Scholar 

  • Juliussen I, Juliussen I (1996) The 8th annual computer industry almanac. International Thomson Publishing, Florence, KY

    Google Scholar 

  • Karshenas M, Stoneman P (1993) Rank, stock order and epidemic effects in the diffusion of new process technologies: an empirical model. Rand Journal of Econometrics 24(4): 503–528

    Article  Google Scholar 

  • Kridel D, Rappaport P, Taylor L(1997) The demand for access to online services and the internet. Mimeo, PNR Associates, Jenkintown, PA

    Google Scholar 

  • Langlois RN, Robertson PL (1995) Firms, markets and economic change: a dynamic theory of business institutions. Routledge, New York

    Google Scholar 

  • Lichtenberg F (1993) The output contributions of computer equipment and personnel. NBER Reprint No. 2044 (also Working Paper 4540)

    Google Scholar 

  • Lichtenberg F, Lehr L(1996) Computer use and productivity growth in federal government agencies. NBER Working Paper No. 5616

    Google Scholar 

  • Luzio E, Greenstein S (1995) Measuring the performance of a protected infant industry: the case of Brazilian micro-computers. Review of Economics and Statistics 110(3): 622–633

    Article  Google Scholar 

  • McKelvey M (1998) Evolutionary innovations: learning, entrepreneurship and the dynamics of the firm. Journal of Evolutionary Economics 8(2): 157–175

    Article  Google Scholar 

  • Meeker M, Dupuy (1996) The internet report. Harper Business Press, NY

    Google Scholar 

  • Minoli D (1991) Telecommunications technology handbook. Artech House, Boston

    Google Scholar 

  • Moss ML, Townsend A (1996) Leaders and losers on the internet. Taub Urban Research Center, New York University, http://www.nyu.edu/urban/research/internet.

    Google Scholar 

  • Mowery D (1996) The international computer software industry: a comparative study of industry evolution and structure. Oxford University Press, New York

    Google Scholar 

  • OECD (1989) The internationalization of software and computer services

    Google Scholar 

  • Raff D, Trajtenberg M (1995) Quality-adjusted prices for the American automobile industry: 1906 – 1940. NBER Working Paper No. 5035

    Google Scholar 

  • Roller H, Waverman L (1996) Endogenous growth and telecommunications infrastructure investment. Mimeo, OECD

    Google Scholar 

  • Saloner G, Steinmueller WE (1996) Demand for computer products and services by large European organizations graduate school of business (GSB). Research Paper No.1370

    Google Scholar 

  • Stoneman P (1983) The economic analysis of technological change. Cambridge University Press, Cambridge, UK

    Google Scholar 

  • Swann P (1998) Clustering in the US computing industry. In: Swann GMP, Prevezer M, Stout D (eds) The dynamics of industrial clustering: international comparisons in computing and biotechnology. Oxford University Press, New York

    Google Scholar 

  • Tedlow RS (1996) Roadkill on the information superhighway (logistics of interactive shopping). Harvard Business Review 74: 164–166

    Google Scholar 

  • Trajtenberg M (1990) Economic analysis of product innovation. The Case of CT Scanners. Harvard University Press, Cambridge, MA

    Google Scholar 

  • Triplett J (1989) Price and technological change in a capital good: a survey of research on computers. In: Jorgenson D, Landau R (eds) Technology and capital formation. MIT Press, Cambridge, MA

    Google Scholar 

  • Von Hippel E (1988) The sources of innovation. Oxford University Press, New York

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Economics Department, Stanford University, Stanford, CA, 99305, USA

    Timothy F. Bresnahan

  2. Kellogg Graduate School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL, 60208-2013, USA

    Shane Greenstein

Authors
  1. Timothy F. Bresnahan
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Shane Greenstein
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Evolutionary Economics Unit, Max Planck Institute for Research into Economic Systems, Kahlaische Str. 10, 07745, Jena, Germany

    Ulrich Witt

Rights and permissions

Reprints and permissions

Copyright information

© 2001 Springer-Verlag Berlin Heidelberg

About this paper

Cite this paper

Bresnahan, T.F., Greenstein, S. (2001). The economic contribution of information technology: Towards comparative and user studies. In: Witt, U. (eds) Escaping Satiation. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-04528-2_9

Download citation

  • DOI: https://doi.org/10.1007/978-3-662-04528-2_9

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-07563-6

  • Online ISBN: 978-3-662-04528-2

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation