ECON 4700/8706 & BSAD 8706
The
Economics of eBusiness
Spring 2003
(Last revised: April 17, 2003)
Arthur Diamond
Office: RH 512E
Office phone: 554-3657
Office Hours: 12:45-1:45 PM Mon. & Wed.; 5:30-6:00 PM Wed.; and by
appointment.
Internet address: adiamond@mail.unomaha.edu
World Wide Web home page:
http://cba.unomaha.edu/faculty/adiamond/web/diahompg.htm
Seminar Description:
The three credit-hour seminar meets
on Wednesdays from 6-8:40 PM. The
course will be conducted mainly as a seminar with ample student participation,
including a research paper.
A "New
Economy" has often been identified with the rise of e-business. We will examine whether the rise of
e-business has brought with it a change in the rules of the economy, and we
will look at the effects of e-business on business, labor, consumers, and the
stock market. We will focus on the
effects of e-business on pricing, product specialization, economies of scale,
and globalization; and we will try to judge whether the effects are likely to
differ by industry. The effects of
e-business on a firm's competitive advantage through increased information flow
and better inventory and input management, will be examined. Another focus of attention will be
"network externalities" that are alleged to justify increasing
government regulation of some e-business firms, such as Microsoft.
Approximately the first 12 weeks of the seminar will
focus on instructor-led discussion of important topics in the economics of
e-business. Readings for this section
of the course will consist of chapters from the text, as well as important,
usually recent, academic papers on the topics under discussion.
During the course, some time will be spent reviewing the
characteristics of good writing style in economics and on effective research
techniques
During the last three weeks, or so, of the seminar,
instructor-led discussions will be significantly supplemented by student
presentations on topics related to their papers and reviews.
Prerequisite:
ECON 2200 or permission of the instructor.
Main Required Texts:
Christensen, Clayton M. The Innovator's Dilemma. Harper Books, 2000. [ISBN # 0-06-662069-4] {paperback edition}
Assigned reading: Introduction (pp. xi-xxxii); Ch. 3 up to the notes (pp. 69-83); Ch. 11
(pp. 257-261)
Gates, Bill. Business @ the Speed of Thought. New York:
Warner Books, 2000. [ISBN #
0446675962] {paperback edition} Assigned reading: pp. xiii-xxii, 3-38, 407-415.
Gilder, George. Telecosm: How Infinite Bandwidth Will Revolutionize
Our World. Touchstone Books, 2002. {paperback edition} [ISBN # 0743205472] Assigned reading: pp. 1-18, 31-41, 69-81, 256-264.
Grove, Andrew S. Only the Paranoid Survive. Bantam Books, 1999. [ISBN # 0385483821] {paperback edition}
(Warren Buffet says this is a great book.)
Assigned reading: initial Schumpeter quote and pp. 3‑52.
Other Required Readings:
Additional journal articles and chapters from monographs
will be assigned on a weekly basis related to the topics that are to be
discussed. Some of the readings below,
may be included. These readings either
will be downloadable from the web, or will be made available through BlackBoard
or will be at the reserve desk of the library.
Baily, Martin Neil.
“Information Technology and Productivity: Recent Findings.”
presented at Jan. 2003 AEA meetings in Washington D.C.
Bresnahan, Timothy F., Erik Brynjolfsson, and
Lorin M. Hitt. “Information Technology,
Workplace Organizational and the Demand for Skilled Labor: Firm-level Evidence.” Quarterly Journal
of Economics 117, no. 1(Feb. 2002):
339-376. (Earlier draft
downloadable at: http://ecommerce.mit.edu/erik/ITW-final.pdf)
Brynjolfsson, Erik, Amy Austin Renshaw and Marshall Van Alstyne. “The Matrix of Change: A Tool for Business Process Reengineering.” Sloan Management Review (Winter
1997): 37-54.
Brynjolfsson, Erik and Lorin M. Hitt. “Beyond Computation: Information Technology, Organizational
Transformation and Business Performance.” Journal of Economic Perspectives
14, no. 4 (Fall 2000): 23-48.
Brynjolfsson, Erik and Michael D. Smith. “Frictionless Commerce? A Comparison of Internet and Conventional
Retailers.” Management Science
46, no. 4 (April 2000): 563-585.
(Earlier draft downloadable at:
http://ecommerce.mit.edu/papers/friction/friction.pdf)
Brynjolfsson,
Erik, Michael Smith, Yu Hu. Consumer Surplus in the Digital
Economy: Estimating the Value of Increased Product Variety. 2002.
Brynjolfsson, Erik, Thomas W. Malone, Vijay
Gurbaxani, and Ajit Kambil. "Does
Information Technology Lead to Smaller Firms?”
Management Science 40, no. 12 (December 1994): 1628-1644.
(Earlier draft downloadable at:
http://ccs.mit.edu/papers/CCSWP123/CCSWP123.html)
Christensen, Clayton M., Scott D. Anthony and Erik A. Roth.
“Innovation in the Telecommunications Industry: Separating Hype from Reality.” Oct. 2001 working paper.
David,
Paul A. "The Dynamo and the
Computer: An Historical Perspective on the Modern Productivity Paradox." American
Economic Review 80, no. 2 (May 1990):
355-361.
DeLong. J. Bradford and Lawrence H.
Summers. “The “New Economy”: Background, Questions and
Speculations.” Federal Reserve Bank
of Kansas City Economic Review (Fourth Quarter 2001): 29-59
(Originally presented at the Jackson Hole Conference of the Kansas City
Federal Reserve Bank, August 2001.)
_____.
Ch. 8: “Friction-Free
Capitalism.” in The Road Ahead.
New York: Viking, 1995. (HF5548.32.G38 1999)
Hall, Robert. "e-Capital: The Link between the Labor Market and the Stock Market in the
1990s." Brookings Papers on
Economic Activity, 2000, Vol. 2:
73-118.
Hall, Robert. "Struggling to Understand the Stock
Market." American Economic
Review 91 (May 2001): 1-11.
(Earlier version downloadable from his web site at: http://www.stanford.edu/~rehall/) [Read most of the paper lightly, but read
carefully the sections that mention Yahoo and eBay.]
McCloskey, Donald.
"Economical Writing." Economic
Inquiry 23 (April 1985):
187-222. (HB21.W43)
Ross, Jeanne.
"E-Business at Delta Air Lines:
Extracting Value from a Multi-Faceted Approach." MIT Sloan School of Management, Center for
Information Systems Research, Working Paper, No. 317 (August 2001).
Shapiro, Carl and Hal R. Varian. Selected passages from: Information Rules: A Strategic Guide to the Network Economy. Boston:
Harvard Business School Press, 1999.
Tufte, Edward R. The Visual Display of Quantitative Information. Cheshire, Conn.: Graphics Press, 1983, pp. 13-15, 53-54, 93-96, 107-110.
491 Course Requirements:
Course grades will depend on the grades received on a
midterm (100 points), a final exam (110 points), a medium-length critical
review (100 points) of a book related to eBusiness, and a seven minute
presentation (20 points) based on the critical review. The midterm will consist of a combination of
multiple choice questions and essay questions.
The review should be 8-10 pages of double-spaced,
typewritten text (not including any footnotes and references). The review should summarize the substantive
content of the book, stating the main themes or theses in each major section.
The review should state the intended audience for the book, the clarity of the
writing style, and the accuracy and usefulness of the information and analysis
in the book. The student should do a
thorough search for other published reviews of the book, and should summarize
these reviews in her own critical review.
A bibliography at the end of the review should include a full
bibliographic citation to the book under review, as well as citations to any
published reviews that are mentioned in the critical review. The correct form for the bibliography is
provided later in this syllabus. Most
of the guidelines in the syllabus section “Guidelines for Term Papers” also
applies to the critical reviews.
However, unlike the graduate term papers, the critical reviews do not
need an abstract, do not require a literature search in Ingenta (formerly
“UnCover”) and other literature search databases, and do not require a
“thesis.”
The critical review should be
submitted in paper form and also in digital form in Diamond’s digital drop box
in BlackBoard. Please name the file
with an abbreviated title of your book.
The review, with due attribution to you as the author, will be posted
either to BlackBoard or to Diamond’s web site (or both) for future students to
read and study.
Undergraduates will be graded on a more favorable scale
than graduate students.
891 Course Requirements:
Course grades will depend on the grades received on a
midterm (100 points), a 12 minute class presentation (30 points), an extended
research paper (130 points) on a thesis related to one of the topics covered on
the reading list, and a final exam (70 points).
Each graduate student will select an eBusiness company
from a list provided by the instructor.
The student will prepare a term paper of 14-16 pages of double-spaced,
typewritten text (not including any footnotes and references) on the company
that provides information on:
·
The firm’s history.
·
The firm’s business model.
·
The economic plausibility of the firm’s business model.
·
The value over time of the firm’s stock, revenue, and profits.
·
The firm’s future prospects for profitability.
·
The analysis of the firm by “experts” in the press and elsewhere.
Experts can include, but
should not be limited to, the stock sector analysts of the major investment
firms. Academic experts and reputable
journalists should be given greater emphasis due to the frequent conflicts of
interest among investment firm analysts.
Sources
that will be searched for relevant information include the two main eBusiness
journals: Red Herring and Business 2.0.
Students will also be taught how to find relevant information from
Lexis-Nexis, and from the Yahoo Finance web site.
Among the companies that
might be studied are:
Avistar
Communications (AVSR); Gilder likes in 9/02 Report.
BlueArc
(data storage; Gilder likes; N.Y.T., 3/27/01, c4; WSJ, 3/12/01, B1)
Broadcom
(makes broadband communication chips)
Cisco
ContentGuard (digital rights company spun off
of Xerox PARC; see: Technology Review
Jan./Feb. 2001, p. 101)
Digital Fountain (praised by Gilder)
Epinions
ForSaleByOwner.com
Getty
Images
Hotwire
(competitor to Priceline: WSJ, 8/28/02,
p. D2)
Kazaa
(most-popular Napster replacement)
Infinera
(1st integrated photonic circuit; Red Herring, 4/2002, pp. 41-44)
Listen.com
(praised by Gilder)
MySimon
RealNetworks
SyncIt
United
Online (formed from merger of Juno & Netzero)
WorldStreet
(peer-to-peer; WSJ 7/5/01, B6)
Also: Any of the companies that Gilder discusses
in his appendix entitled “Nine Stars of the Telecosm” in his Telecosm.
Other companies may be
chosen whose business substantially consists of some form of eBusiness, or the
infrastructure of eBusiness. No company
that was reported on by a student in previous years, should be chosen (see
BlackBoard for previous presentations).
The term review should be submitted both in paper form,
and in digital form on disk or as an email attachment. The
term paper should be submitted in paper form and also in digital form in
Diamond’s digital drop box in BlackBoard.
Please name the file with the name of your company. The paper, with due attribution to you as
the author, will be posted either to BlackBoard or to Diamond’s web site (or
both) for future students to read and study.
In addition to the paper, in the second half of the
course each graduate student will give a 12 minute presentation on her company,
followed by about 5 minutes of questions from the class, and class
discussion.
BlackBoard:
Much information concerning the
course will be posted to the web pages of BlackBoard which has a URL of: http://blackboard.unomaha.edu/. For example, PowerPoint slides that
accompany class lectures will generally be posted to BlackBoard. Test grades will also be posted there. Announcements pertaining to the class will
either appear on BlackBoard or be sent out via Notes email through
BlackBoard.
The following table provides the graduate student grading scale in terms
of percentages, and total points in the course:
|
Grades |
Percentages |
Points |
|
A+ |
95-100 |
313-330 |
|
A |
90-94 |
297-312 |
|
A- |
85-89 |
280-296 |
|
B+ |
82-84 |
270-279 |
|
B |
78-81 |
257-269 |
|
B- |
75-77 |
247-256 |
|
C+ |
72-74 |
237-246 |
|
C |
68-71 |
224-236 |
|
C- |
65-67 |
214-223 |
|
D+ |
62-64 |
204-213 |
|
D |
58-61 |
191-203 |
|
D- |
55-57 |
181-190 |
|
F |
54 or less |
180 or less |
The following
table provides the undergraduate
student grading scale in terms of percentages, and total points in the course:
|
Grades |
Percentages |
Points |
|
A+ |
93-100 |
306-330 |
|
A |
88-92 |
290-305 |
|
A- |
83-87 |
273-289 |
|
B+ |
80-82 |
264-272 |
|
B |
76-79 |
250-263 |
|
B- |
73-75 |
240-249 |
|
C+ |
70-72 |
231-239 |
|
C |
66-69 |
217-230 |
|
C- |
63-65 |
207-216 |
|
D+ |
60-62 |
198-206 |
|
D |
56-59 |
184-197 |
|
D- |
53-55 |
174-183 |
|
F |
52 or less |
173 or less |
Course Grade
Reporting:
In a memo dated February 5, 2001,
Vice Chancellor Derek Hodgson has advised faculty that posting grades may be a
violation of the "Privacy Rights of Parents and Students Act" of
1974. Grades will not be posted.
A student who needs early reporting of the course grade at the end of
the semester should provide the instructor with a stamped, self-addressed
envelope. A student who needs early reporting of the course grade may
obtain the grade through eBRUNO on the Registrar’s World Wide Web home page.
Cheating:
Exams will be attentively monitored. The result of academic dishonesty will be a
grade of F for the seminar and a recommendation for expulsion from the
university.
“Honors Contract” for Undergraduate Honors Students:
Undergraduate students enrolled in the Honors Program,
may receive honors credit for the course by completing an honors contract and
fulfilling the terms of the contract.
The contract will specify conditions identical to the graduate
requirements for the course (viz., a presentation and a longer term paper).
Partial, Tentative Outline of Readings Assignments:
Some of the special value of a special topics seminar is
that we can be especially responsive to the special and evolving interests of
the students and professor; and can include the latest breaking research on the
topics studied. As a result, the
following schedule is very tentative and will be modified and expanded as the
semester progresses. For example, I
would like to try to schedule a visit from some local business person active in
some aspect of eBusiness.
Readings with an asterisk (*) in front of them will be
discussed in class, but are not “required.”
1. 1/15/03 Description
of course; some dot.com’s to consider.
Amazon.com
Ameritrade
BizRate.com
eBay
Epinions
Orbitz
PayPal
premiumknives.com
2. 1/22/03 Research
tools in economics of eBusiness; how to write clearly; exploration and analysis
of auction sites; for this class
session, we will meet in RH 402.
McCloskey on writing
clearly
Hall on economics of how e-auctions work
3. 1/29/03 Schumpeter; Andy Grove, Only the
Paranoid Survive
4. 2/5/03 Clayton Christensen, The
Innovator’s Dilemma
5. 2/12/03 The
“New Economy”: Historical Precedents (Tentative term paper topics due.)
David, Paul A. on Dynamo
Gordon
DeLong Montreal speech
6. 2/19/03 Does
eBusiness Benefit the Consumer (aka Make the Market More Efficient): Prices, Information, and Variety of Products
Brynjolfsson, Smith, and Hu. Consumer Surplus.
Brynjolfsson
and Smith on friction-less market.
Gates from The Road Ahead.
*DeLong and Froomkin.
7. 2/26/03 Does
eBusiness Make Firms More Efficient:
Marketing, Forecasting, Inventory/Production, Human Resources;
Decentralization (Initial bibliography due, in format that will be used in term paper.)
Bill Gates, Business @ the Speed of Thought
Brynjolfsson and Hitt on changes in business practices.
Baily on firm productivity (AEA 2003 notes)
*Jeanne Ross paper on eBusiness at Delta.
8. 3/5/03 Class
starts at 7:00 PM, due to MBA Leadership Series presentation.
Practical Issues in Successful eBusiness; for this class session, we will meet in RH
402.
Brynjolfsson,
Renshaw and Alstyne
on matrix for change.
9. 3/12/03 Midterm exam. (Exam will cover assignments through 3/5/03.).
10. 3/19/03 Spring Break (no class).
11. 3/26/03 Does
eBusiness Benefit the Worker, and the Small Firm?
Presentation by Anthony
Arnold of PreminumKnives.com.
Brynjolfsson,
Malone, Gurbaxani, and Kambil paper on firm size.
Bresnahan,
Brynjolfsson, and Hitt article on skilled labor.
12. 4/2/03 Information
Rules
Presentation by Whit
Andrews of Gartner.
13. 4/9/03 The
Economics of Infrastructure and Bandwidth
Gilder, Telecosm.
Christensen, Anthony and Roth on telecommunications
predictions.
14. 4/16/03 The
“New Economy”: Recent Analyses of
Impact on Business and Economic Growth
DeLong & Summers.
Feldstein.
*Hall on valuation of dot.com stocks.
15. 4/23/03 Student Presentations/Discussions.
McTaggart, Joe. “United Online”
Smith, Amy.
“Broadcom”
Olson, Paul.
“Tivo”
Mahlangeni-Byndon,
Xolani. “Cassidy, John. dot.con: The
Greatest Story Ever Told.”
Mak, Tin. “Getty
Images, Inc.”
Jarrett (Flanagan), Kathleen A. “travelzoo.com”
O’Neil, Sandy. “CyberGuard”
Vanourney,
Kevin J. “AUDIBLE INC.”
Powers, Tami. “Liebowitz, Stan J.
“Re-Thinking the Network Economy.”
16. 4/30/03 Student Presentations/Discussions;
summing up; review. Papers due.
Lundt, Matt. “RealNetworks”
Bagley, Mike. “JDS Uniphase”
Adam, Kristal G. “drugstore.com
Vaughan, David. “Avistar”
Fjeldahl Cindy.
"hotels.com"
Horton, Brian. “Cisco”
Tefft, Tim. “Charles Schwab”
17. 5/7/03 Final Exam. (Exam is comprehensive and may cover
anything covered in course.)
Presentations
Presentations should make use of PowerPoint slides. PowerPoint will not be taught during the
class, but the instructor can guide the student toward resources, that will
help the student to learn the basics of PowerPoint.
Guidelines for Term Papers
Late papers will be accepted, but will have 5% of the
possible paper points deducted initially and an additional 1% deducted for each
day the paper is late beyond the first day (so, e.g., if a paper is five days
late, 9% of the possible paper points will be deducted). Late papers may result in a grade of I
(incomplete) for the course on the initial grade report.
The paper should be written at a consistent level of
difficulty. In most cases, the paper should
be written to be understandable by a conscientious undergraduate economics
major. That means you should assume
that you are writing for someone who is intelligent, interested, short on time,
and does not have a deep knowledge of science or the higher level technical
details of economics.
The paper should have a title page including the title,
your name, the name of the course, the course number and the date on which the
paper is turned in. Following the title
page, on a separate page should be a 100 word abstract. Neither the title page nor the abstract page
counts toward the page limit of the paper.
Pages in the body of the text (beginning with the Introduction) should
be consecutively numbered. The whole
paper should be double-spaced and should have inch and a half margins on the
top, bottom, right and left. The font
size should either be 10 point or 12 point in size. Any quotations longer than one sentence should be presented in
“block indent” form (meaning that the whole quote is indented 5 spaces from the
left edge of the text). Please do not
put your paper in a special binder that would limit the space for my
comments. Instead, staple or clip it
together.
Use endnotes rather than footnotes. (But endnotes should be used only if really
necessary.) When a source is used in
the text, internal references should be given in the text that consist of a
parenthetical mention of the author's last name, the date of the publication
and a specific page number (if appropriate).
For each brief parenthetical reference, a complete bibliographic
reference should be provided in the Bibliography (that is not counted in the
page limit). The ultimate arbiter for
reference format is style “A” described in the latest edition of The Chicago
Manual of Style.
Before you turn in your final draft, be sure to submit it
to a spell-checking program (available with all major word-processing
programs).
As you work on the
text of your paper, be sure to periodically backup your latest draft onto a
floppy disk. Also be sure to keep a
clean copy of your paper for your files---the copy you turn in to me will be
marked-up in red ink.
In your introduction, you should describe your problem
and your thesis. This might be a good
place to mention the contents of any broadly relevant articles that you turned
up in your Ingenta, EconLit and other literature searches. If there is no relevant material on Ingenta
or EconLit for your topic, mention the absence of relevant material (and include
in the appendix, a list of the keywords that you used to search under and the
articles that resulted). (That is, it
would be very unusual to have no relevant articles appear, so if you
claim that there are none, the burden of proof is on you.) Briefly (in a few sentences) summarize what
you will be doing in the rest of the paper.
SOME SPECIFIC
REQUIREMENTS:
a. The paper should have inch and a half
margins on the left hand side, top and bottom.
(Ample margins make it easier for me to jot down comments.)
b. The style for references should follow
the sample form provided on p. 12 of this syllabus. It should be consistent and should provide enough information for
the reader to track down a reference, if necessary. Perhaps the most widely used style format in economics is that
found in: The Chicago Manual of
Style, latest edition, The University of Chicago Press.) Of the two “basic” styles the Manual
discusses, the one used in economics is a variant of what is called style “A.”
c. Attempt to write as McCloskey suggests
in "Economical Writing".
d. Do not place your paper in a
plastic cover or other binder.
e. Make a photocopy of your paper before
turning it in.
f. The paper is due at the beginning of
class on the last day of classes.
Sample Form for Bibliographic References
The following sample
bibliography is intended to illustrate the mandated reference format for
several different kinds of publications.
The last entry is for a web resource, and gives an example where a lot
of information is available---you may not always be able to provide quite as
much detail, but should provide what you can.
. (The Jones entry is
fictitious, and is adapted from:
http://www.lib.ohio-state.edu/guides/chicagogd.html)
Ackermann, Robert John.
Data, Instruments and Theory.
Princeton, N.J.: Princeton
University Press, 1985.
Acs, Zoltan J., David B. Audretsch and Maryann P.
Feldman. "Real Effects of Academic
Research: Comment." The American Economic Review 82, no.
1 (March 1992): 363-367.
Adams, James D.
"Fundamental Stocks of Knowledge and Productivity
Growth." Journal of Political
Economy 98, no. 4 (August 1990):
673-702.
Alchian, Armen A.
"Private Property and the Relative Cost of Tenure." In Economic Forces at Work. Indianapolis: Liberty Press, 1977 (essay originally published in 1958).
American Chemical Society. Directory of Graduate Research 1989. Washington, D.C.: American Chemical Society, 1989.
Becker, William E., Jr.
"Maintaining Faculty Vitality through Collective
Bargaining." In Clark, Shirley M.
and Lewis, Darrell R., eds. Faculty Vitality and Institutional
Productivity: Critical Perspectives for
Higher Education. New York: Columbia University, Teachers College Press,
1985, pp. 198-223.
Davis, Elizabeth.
"Compensation Gains of Faculty Unions and the Unemployment Effect
of Extending Unemployment Insurance Coverage." (PhD Dissertation,
University of Michigan, 1988).
Diamond, Arthur M., Jr.
"Age and the Acceptance of Cliometrics." The Journal of
Economic History 40, no. 4 (December 1980): 838-841.
. "The Career Consequences of Accepting a
Scientific Mistake." working
paper, 1992.
Friedman, Milton.
"An Open Letter for Grants."
Newsweek (May 18,
1981): 99.
Garfield, Eugene, (chairman). Science Citation Index.
Philadelphia: Institute for
Scientific Information, Inc., 1961-present.
Jones, Sarah Jean.
“The Country of Last Resort.” [online]. New York: Columbia University,
Academic Information Systems, Bartleby Library, posted Jan. 2, 1996 [cited
October 12, 1998]. Available from World
Wide Web: (http://www.columbia.edu/acis/.bartleby/jones)
Lucas, Robert E., Jr. "Incentives for Ideas." New York Times (April 13, 1981): 23.
Moore, Rich. "Compaq Computer: COMPAQ Joins the Fortune 500 Faster Than Any Company in History." In Businesswire [database online]. San Francisco: Business Wire. 1986-[updated 9 April 1986: cited 10 March 1990]. Accession no. 000782: NO=BW420. 5 screens. Available from DIALOG Information Services, Inc., Palt Alto, Calif.
Important Dates:
Mar.
12: midterm exam (tentative date).
Mar. 17 - 21: Spring break; no classes.
Apr.
4: Last day to drop course with a grade
of "W".
May 7: Final exam 6:00 - 8:40 PM.