Information good
Encyclopedia
Information good in economics
and law
is a type commodity
whose main market value is derived from the information
it contains. It may also include services (information services). The typical examples of information goods include a CD
containing pieces of music, a DVD
containing a movie, a computer file which is a piece of program, a book containing short stories, and so on.
In information goods, the valuable part is a pattern in which the material is arranged - the arrangement of ink on paper, paint on canvas, magnetic elements on a tape, a series of dents (pits) on a compact disc, etc. Those patterns might be either directly consumed by humans (through reading, viewing, etc.) or may be used to operate other devices such as a cassette player or a computer. The working of device, in turn, may produce some consumable pattern of information (such as visual, sound, or text), another pattern for the use of other devices, or both.
Information goods are often contrasted with material goods such as clothes, food, and cars. The market values of these goods typically rely on both the nature of material and its arrangements. When a car is made of wood instead of metals, for example, the market value of the car would be very limited.
This uncertainty of utilities is considered a source of market failure by some.
Advertisements, brand
s, third-party reviews and other secondary sources of information may play a bigger role in determining the demand curve, possibly resulting in a sub-optimal equilibrium of supply and demand
.
What is more, information goods are not consumed by the act of copying. On this basis, some argue that information (but not necessarily information goods) should be provided without cost and limitations to copying.
In Economics
, information plays at least a double role. On one side, perfect information
is a key element to explain efficient market hypothesis
. Here, information is understood to be instantly available for everybody at no cost and being complete.
On the other side, actual markets often depend on information as a commodity: information goods. Here, information is understood to be restricted in access, costly and often only partially available.
Thus, economic theory faces the problem of constantly dealing with two contradictory concepts of information at the same time. If "efficiency" is the dominant aspect of analyses, it is likely that commodification is considered to be harmful. If "incentive for creation" is the dominant aspect of analyses, the protection of the creator is likely to be dominant.
But Economists seem to lack a general principle according to which this decision can be made systematically. Thus, Boyle concludes that in economic analyses "the nature of information is 'in a state of doubt'".
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
is a type commodity
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
whose main market value is derived from the information
Information
Information in its most restricted technical sense is a message or collection of messages that consists of an ordered sequence of symbols, or it is the meaning that can be interpreted from such a message or collection of messages. Information can be recorded or transmitted. It can be recorded as...
it contains. It may also include services (information services). The typical examples of information goods include a CD
Compact Disc
The Compact Disc is an optical disc used to store digital data. It was originally developed to store and playback sound recordings exclusively, but later expanded to encompass data storage , write-once audio and data storage , rewritable media , Video Compact Discs , Super Video Compact Discs ,...
containing pieces of music, a DVD
DVD
A DVD is an optical disc storage media format, invented and developed by Philips, Sony, Toshiba, and Panasonic in 1995. DVDs offer higher storage capacity than Compact Discs while having the same dimensions....
containing a movie, a computer file which is a piece of program, a book containing short stories, and so on.
In information goods, the valuable part is a pattern in which the material is arranged - the arrangement of ink on paper, paint on canvas, magnetic elements on a tape, a series of dents (pits) on a compact disc, etc. Those patterns might be either directly consumed by humans (through reading, viewing, etc.) or may be used to operate other devices such as a cassette player or a computer. The working of device, in turn, may produce some consumable pattern of information (such as visual, sound, or text), another pattern for the use of other devices, or both.
Information goods are often contrasted with material goods such as clothes, food, and cars. The market values of these goods typically rely on both the nature of material and its arrangements. When a car is made of wood instead of metals, for example, the market value of the car would be very limited.
Information goods and uncertainty
Some information goods, such as novels, movies, and newspapers, have the peculiar property that before consumption of the goods, a consumer may not be able to assess the utility of the goods accurately and reliably. The process of evaluating utility may require the very process of consumption.This uncertainty of utilities is considered a source of market failure by some.
Advertisements, brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
s, third-party reviews and other secondary sources of information may play a bigger role in determining the demand curve, possibly resulting in a sub-optimal equilibrium of supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
.
Information goods and scarcity
Some information goods can be reproduced and distributed relatively inexpensively. Copying recorded music from radio, cassette player, CD player, etc. to a tape or computer hard disc is, for example, widely-practiced in many societies.What is more, information goods are not consumed by the act of copying. On this basis, some argue that information (but not necessarily information goods) should be provided without cost and limitations to copying.
Information goods and excludability
As digital technologies and digital electronic network in some countries became very popular, it became very easy to reproduce and widely distribute some information goods. However, due to the difficulty of control on copying and distributing activities of individuals using such technologies, it is often harder for the producer of such good to prevent illegal distribution of proprietary works.Economic Theory and the treatment of Information
(From: James Boyle, 1996, chap. 4 "Information Economics")In Economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, information plays at least a double role. On one side, perfect information
Perfect information
In game theory, perfect information describes the situation when a player has available the same information to determine all of the possible games as would be available at the end of the game....
is a key element to explain efficient market hypothesis
Efficient market hypothesis
In finance, the efficient-market hypothesis asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information available at the time the investment is made.There are...
. Here, information is understood to be instantly available for everybody at no cost and being complete.
On the other side, actual markets often depend on information as a commodity: information goods. Here, information is understood to be restricted in access, costly and often only partially available.
Thus, economic theory faces the problem of constantly dealing with two contradictory concepts of information at the same time. If "efficiency" is the dominant aspect of analyses, it is likely that commodification is considered to be harmful. If "incentive for creation" is the dominant aspect of analyses, the protection of the creator is likely to be dominant.
But Economists seem to lack a general principle according to which this decision can be made systematically. Thus, Boyle concludes that in economic analyses "the nature of information is 'in a state of doubt'".
See also
- Intellectual propertyIntellectual propertyIntellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
- copyrightCopyrightCopyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
- Digital Millennium Copyright ActDigital Millennium Copyright ActThe Digital Millennium Copyright Act is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization . It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to...
- file sharingFile sharingFile sharing is the practice of distributing or providing access to digitally stored information, such as computer programs, multimedia , documents, or electronic books. It may be implemented through a variety of ways...
- private goodPrivate goodA private good is defined in economics as "an item that yields positive benefits to people” that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its benefits; and rivalrous, i.e. consumption by one...
- public goodPublic goodIn economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
- Information asymmetryInformation asymmetryIn economics and contract theory, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry, a kind of market failure...