OTT (over-the-top) is a means of providing television and film content over the internet at

the request and to suit the requirements of the individual consumer. The term itself stands
for “over-the-top”, which implies that a content provider is going over the top of existing
internet services.
ICT= information and communication technologies
A non-rival product means that it can be consumed by one person without reducing the
amount or quality available to others.
The 4th text is sort of a very rich conclusion.

Internet of things (IOT) is the interconnection between the Internet and physical objects,
places and environments. The term refers to a growing number of objects connected to the
Internet, enabling communication between our so-called physical assets and their digital
existences.

Vial, JOURNAL OF STRATEGIC INFORMATION SYSTEMS REVIEW

At a high level, digital transformation (DT) encompasses the profound changes taking place
in society and industries through the use of digital technologies.
Precise definition from Vial and co: “a process that aims to improve an entity by triggering
significant changes to its properties through combinations of information, computing,
communication, and connectivity technologies”.
About ethical business
Firms are able to increase customer proximity and tailor service offerings based on latent
preferences that seldom need to be made explicit through the analysis of data collected.
Even if data collecting is beneficial for business, unethical abuses of these strategies don’t
make good advertising and recent news showed it (Facebook).

Conclusion
Our review of IS research on the digital transformation phenomenon highlights a rich body of
literature that contributes to our understanding of the benefits as well as the challenges
associated with digital transformation at multiple levels. Our findings underline the
increasing complexity of the environment within which firms operate. As digital
technologies afford more information, computing, communication, and connectivity, they
enable new forms of collaboration among distributed networks of diversified actors. In doing
so, they also create dependencies among actors whose interests may not fully be aligned.
This new reality offers tremendous potential for innovation and performance in
organizations, and extends beyond the boundaries of the firm to affect individuals, industries,
and society. At the same time, it renders firms’ ability to sustain their competitive advantage
more fragile than ever as they control fewer elements of their operating environment.

Digital Economics, Goldfarb & Tucker

Digital technology is the representation of information in bits. This reduces the cost of
storage, computation, and transmission of data. Research on digital economics examines
whether and how digital technology changes economic activity.
Across a variety of fields, economists examine how digital technologies change economic
activity. While these papers often have different perspectives and cite different literatures, a
core theme is that digitization has reduced a number of specific economic costs. We have
identified five such costs:
- Search ( easier to find and compare information about potential economic transactions
online)
- Reproduction (information can be shared without diminishing the original information “the
Internet can be seen as a “giant, out of control copying machine.”)
- Transportation (Related to replication being costless, the cost of transporting information
stored in bits over the Internet is near zero)
- Tracking (Digital activity is easily recorded and stored. In fact, many web servers store
information automatically. Reductions in tracking costs enable personalized/differentiated
products and advertising models.
- Verification (digital technologies have also made it easier to verify identity and also create
a digital reputation.)

Digital Transformation, Verhoef

External drivers: New technologies (WWW, clouds, online payment, smartphones) are
leading to a huge change of the competition landscape (young digital firms regaining market
shares such as GAFAM revolutionizing the market), influencing the consumer’s behavior.
Phases: Digitization (encoding of analog information into a digital format) ➤ Digitalization
(describes how IT or digital technologies can be used to alter existing business processes)➤
Digital transformation (the most pervasive phase, describing a company-wide change that
leads to the development of new business models )
Strategic imperatives:
- Digital assets (like the storage of data, information and communication infrastructure, and
accompanying technologies to effectively compete in the digital era).
- Organizational structure (flexible organization forms that allow for fast responses to
constant digital change).
- Growth strategy (a variety of digital growth strategies exist, but the most prominent growth
strategy involves the use of digital platforms).
- Metrics and goals (digital firms need to measure the performance improvements on
performance indicators to facilitate learning and fine-tune the business model).
Government and economics in the digital economy, Spence

As we enter the digital era, revolutionary innovations in the digital economy have significantly
changed methods of production and ways of life. As a type of capital, digital intangible
assets can tremendously improve the production efficiency and market value of
companies. Big data analysis technology reduces information friction and increases
prediction accuracy in financial markets, subsequently improving the efficiency of
investment.
In the public sector, the positive externality of data generates useful public information,
guides public decision-making, and improves social welfare.

Nevertheless, the digital economy simultaneously generates a number of problems. The

benefits of big data analysis sometimes come at the expense of violating users’ privacy,
while the free flow of data, information, and technologies causes national security
concerns (ex: misinformation). Digital mega-platforms may also abuse their huge market
power to conduct predatory and discriminatory pricing behavior, therefore damaging
consumer surplus and innovation dynamism. The laissez-faire approach will not work for
the digital economy. Rather, the government has an indispensable role to play—it must
intervene in the name of equity and fairness as well as sociopolitical and social cohesion.
Besides these distributional problems, there are many other problems that the market will
not solve on its own without government intervention, including externality problems and
informational gap problems. Tax evasion is also a major challenge for states.

Slide 3: Challenges of the digital revolution

The digital economy includes a long list of distinctive features not seen in other
types of economies. For example, the greatest part of the online goods are free (email
services, information services, Google Maps,..) but have a massive positive impact on our
economies. However, they can’t contribute to the national accounts because indicators like
GDP only measure the monetary value of all final goods with a price.
Positive effects of the digital economy:
- Digital intangible assets create value for companies: Data and the ability to create value
through data become factors of production.
- The digital economy reduces information friction in financial markets
- The positive externality of data generates useful public information and improves social
welfare (verification)
- Digital mega-platforms promote the efficiency of supply and demand matching
- Health care ( digital health care will improve prevention, which remains less developed than
curative medicine, by detecting earlier pathologies).

Negative effects:
- Trust and personal data privacy (illegal aspect)
- Data ownership (legal aspect, gathered data threw cookies for example)
- Unemployment and underemployment
- Inequality: Innovative, highly skilled jobs will continue to get the lion’s share of income in
the modern economy. The problem of distribution will become more difficult.
- Taxing: The internet knows no borders, which is a good thing. But countries need to
cooperate on taxes to avoid tax evasion.
- National security (hacking and illegal data gathering)
- Environment and sustainable development (important needs of energy and rare ressources
(gold, steel, nickel).
 Slide 4: Price discrimination 1/2

Price discrimination is a selling strategy that charges customers different prices for the
same product or service based on what the seller thinks they can get the customer to agree
to. In pure price discrimination, the seller charges each customer the maximum price they
will pay. In more common forms of price discrimination, the seller places customers in
groups based on certain attributes and charges each group a different price.
In order to price discriminate, a seller must satisfy two conditions:
- It must possess market power, because without this condition the price of all units of all
goods will be driven down to the level of costs by competition, and price discrimination
cannot arise.
- It must be able to prevent arbitrage, or resale, because it would imply that the consumers
of the low-priced goods may be tempted to resell them to richer consumers

First degree price discrimination:

In the most extreme case, information technology allows for highly personalized products
sold at a highly personalized price. This phenomenon is also known as ”mass customization”
or ”personalization.” Firms will charge the highest price they can to each consumer, thereby
trying to capture all the consumer surplus. Since the firm has extracted all of the
consumer surplus, profits are equal to total net surplus, or the sum of consumer and
producer surplus. It is clear that this monopoly case is an extreme situation. Online sellers
face competition from each other and from offline sellers, so analyzing competition in this
context is important. Furthermore, long-time suppliers of consumers know more about their
customers than alternative suppliers. Sellers place much emphasis on ”owning the
consumer.”
Finally, Internet retailers revise their prices much more often than conventional retailers, and
that prices are adjusted in much finer increments.

Slide 5: Price discrimination 2/2

- Formally, first-degree price discrimination refers to a case where a monopolist can

extract all the surplus from a heterogeneous set of consumers

- Second-degree price discrimination refers to a situation where everyone faces the same
menu of prices for a set of related products. It is also known as ”product line pricing,” ”market
segmentation,” or ”versioning.” The idea is that sellers use their knowledge of the distribution
of consumer tastes to design a product line that appeals to different market segments.

- Third-degree price discrimination (also called group price discrimination) occurs when a
firm divides its customers into two or more groups based on their price elasticity of demand
and charges them different prices.

- Bundling refers to the practice of selling two or more distinct goods together for a single
price.

- Tying is defined as "an agreement by a party to sell one product but only on the condition
that the buyer also purchases a different (or tied) product, or at least agrees he will not
purchase the product from any other supplier."
 Slide 6: Product differentiation

In the perfectly competitive market, consumers buy goods at the same and lowest price, that
is, even a very small price increase will lead to zero sale for the firm who does it. However,
some buyers may continue to buy from the most expensive firms because they have an
intrinsic preference for the product sold by that firm.
Competitive advantage arises from the many distinct activities that a company performs in
designing, producing, marketing, delivering or supporting its product.

- On parle de différenciation horizontale quand la différenciation porte sur les différences de

goûts (pour des revenus identiques).
Ex: On peut imaginer qu’une société fromagère produisant du Roquefort, produise un jour
un Roquefort doux. L’offre du produit nouveau reposerait uniquement dans ce cas sur une
logique de goût

- On parle de différenciation verticale quand la différenciation porte sur des différences de

revenus. A l’inverse, certaines entreprises " segmentent " la clientèle en fonction de critères
économiques (de revenu).
Ex: On peut citer les fromages de qualité et les fromages " industriels "

Product differentiation generates market power.

Slide 7: Digital platforms

A platform is an entity that brings together economic agents and actively manages network
effects between them.
Two key requirements to be considered a platform:
- First, the entity must facilitate the interaction between users who are linked by some form
of network effects
- Second, the entity must manage these network effects in an active way: digital
technologies can help add or redistribute value through price and non-price instruments.

There are two types of network effects:

- direct ones (each of the network’s users benefit from the connection of other users on the
network (Facebook, Instagram,..) all users are of the “same type”
- indirect ones (platforms put in contact several types of actors, user satisfaction on one side
of the market increases with the number of users on the other side)

↓↓
Effects of the platforms
- Positive same-side effect: benefits for users when the number of ST (same type) users
increase (ex: social networks)
- Negative SS effect: inconvenient for users when the number of ST users increase (Uber,..)
- Positive cross-side eff: Benefits received when users of the OT (other type) increase
(publicity)
- Neg cross-side eff: inconvenient of the increasing of the users of the OT
- Negative network effect: growth in users leads to increasing difficulty to find the best
product (for example a dating site). One way to get rid of that is to include lots of selection
settings.