Web 2.0 is Cheap: Supply Exceeds Demand

Prometheus, Vol. 28, No. 3, pp. 267-285, 2010

22 Pages Posted: 1 Apr 2009 Last revised: 5 Aug 2014

See all articles by Thierry Rayna

Thierry Rayna

École Polytechnique, i3-CRG, UMR CNRS 9217

Ludmila Striukova

SKEMA Business School - Paris la Défense Campus

Date Written: September 1, 2010

Abstract

The aim of this article is to evaluate, from an economic perspective, the efficiency of Web 2.0. It demonstrates that, because of the non-monetary nature of Web 2.0, several sources of inefficiencies (search costs, externalities, crowding out and adverse selection) exist. Nonetheless, the economic nature of digital products and the expected low value of most online content make it impossible to adopt a simple market scheme for Web 2.0. In contrast, this article introduces a concept of demand-driven Web 2.0 (as opposed to the current Web 2.0, which is supply-driven) that is expected to provide stronger incentives, through financial reward, for high quality content within a Web 2.0 environment.

Keywords: Web 2.0, Transaction costs, Externalities, Adverse selection, Efficiency, Public Goods

JEL Classification: H41, D61, D62, D23, D82, D83, L15, L86

Suggested Citation

Rayna, Thierry and Striukova, Ludmila, Web 2.0 is Cheap: Supply Exceeds Demand (September 1, 2010). Prometheus, Vol. 28, No. 3, pp. 267-285, 2010, Available at SSRN: https://ssrn.com/abstract=1371077

Thierry Rayna (Contact Author)

École Polytechnique, i3-CRG, UMR CNRS 9217 ( email )

828 boulevard Marshals
Paris, 91762
France

Ludmila Striukova

SKEMA Business School - Paris la Défense Campus ( email )

Paris la Défense, 92916
France

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