How Should Information Technology be Regulated?

Abstract

With Information Technology (IT) playing a more central role in the modern economy, governments the world over are displaying an active interest in regulating IT firms with the goal to increase competition, foster local firms or increase social surplus. My research informs such policymakers in two critical and relevant areas: the effect of regulations on IT investments and societal wellbeing (measured as total surplus), and the net productivity effects of increased IT investments. In my first research stream, I use analytical modelling methodologies to evaluate the impact of specific regulatory mechanisms, thereby creating a theoretical template for how such regulations can be evaluated. In my first chapter in this stream, I analyze how firm investments can be incentivized and coordinated through a platform, and whether the platform as an institutional mechanism requires regulatory intervention. In my second chapter, I analyze Data Portability Regulations which require that platforms allow users to download their data and port it to competing firms. Such laws have been passed by the E.U. and the state of California, and are being considered by the U.S. Congress. I study whether this regulation accomplishes the law’s goal of encouraging competition in the data economy. In a second research stream, I use structural econometric models to measure the effect of IT investments on energy productivity. I execute this by mathematically deriving a structural econometric model to estimate the impact of IT on the output elasticity of energy. Thus, if a policy decision to regulate platforms causes a decrease in firm IT investments, my empirical work measures the impact of such decreases, both in terms of its direct effect on marginal product as well its indirect effect through the change in the productivity of energy.