Post on 14-Dec-2015
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AGENDAAGENDA
Final Thesis
Free economy
Christian Dahlhausen
Prof. Dr. Rainer Clement
Prof. Dr. Dirk Schreiber
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FachhochschuleBonn-Rhein-SiegUniversity of Applied Sciences Fachbereich InformatikDepartment of Computer Science
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INTRODUCTIONINTRODUCTION
Picture: Anderson, Chris: http://www.longtail.com/the_long_tail/2008/02/wired-cover-sto.html [01.09.2008]
4Picture: Alex Mitrani (2007): http://flickr.com/photos/travellingslowly/479994983/ [15.09.2008]
Limited supply
Unlimited demand
Law of demand and supply
Market mechanism of coordination & ownership
Price takers vs. price makers
Figure: Craven, John (1990): Introduction to Economics, p.615
TRADITIONAL ECONOMYTRADITIONAL ECONOMY
Supply, Demand & EquilibriumSupply, Demand & Equilibrium
Choice under scarcity
Self interest vs max profit
Max Utility with limited budget
Substitute & Income effect influence demand
Figure: Mankiw, N. Gregory and Taylor, Mark P. (2006): Microeconomics: Microeconomics, p.4326
TRADITIONAL ECONOMYTRADITIONAL ECONOMY
Consumer BehaviorConsumer Behavior
7Picture: Donna Bogatin, (2007) CNET: http://blogs.zdnet.com/micro-markets/?p=154 [15.06.2008]
High first-copy costs (Fixed costs)
Low marginal costs
Declining infrastructure costs (processing, storage, bandwidth)
Economies of networks
Abundance rather than scarcity Amazon: 2,3 Mio books Bookshop: 40-100.000 books
Figures: compiled by author, based on Stahler (2001): Geschaftsmodelle in der digitalen Okonomie, p.1978
DIGITAL ECONOMYDIGITAL ECONOMY
DIGITAL GOODS HAVE…DIGITAL GOODS HAVE…
Network effects
Switching costs &
lock-in Durable purchases
(e.g. printer) Specialized suppliers
(e.g. ERP software) Search costs
(e.g. cell phone plans) Loyalty programs
(e.g. Tesco, real, etc.)
System effects
Standards
Figure: compiled by the author, based on Aufderheide, et al. (2006): Internet Okonomie, Wettbewerb und Hybriditat beiEssential Facilities, p.1459
DIGITAL ECONOMYDIGITAL ECONOMY
CHARACTERISTICSCHARACTERISTICS
10Illustration by Jeff Mermelstein
Over-supply Increasing storage & processing
capacity at decreasing costs Unlimited “shelf-space” of digital
businesses
Demand Irrational behavior with free
products No cost-benefit analysis at zero price Difficult to map utility No-cost = no disadvantage
Power of competition Webmail: Google & Yahoo
Critical mass crucial
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FREE ECONOMYFREE ECONOMY
CHARACTERISTICSCHARACTERISTICS
Pictograms: Anderson, Chris (2008): 12
FREE ECONOMYFREE ECONOMY
BUSINESS MODELSBUSINESS MODELS
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FREE ECONOMYFREE ECONOMY
BUSINESS MODELSBUSINESS MODELS
P/CC C
laborlabor
FREE
C Product
Benefit
CFREE FREE
Contribution
BenefitContribution
PC FREE
C
C
C
$
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CONCLUSIONCONCLUSION
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