The New Economy in East Asia and the Pacific

By Peter Drysdale | Go to book overview
Save to active project


A force for market competition or market power?

Lewis Evans


The acquisition, analysis and use of information are fundamental to the operation of all markets. The 'new economy' is characterised by the high level of information processing, storage and distribution made possible by modern computer, electronics and fibre-optic technology, and by the rapid development of new technologies relevant to production and distribution in all sectors of the economy. As long ago as 145-87 BC, the importance of the 'invisible hand' and prices for conveying information for the organisation of economic activity were recognised. 1 In this chapter I shall review the principal themes of the economic analysis of information over the past 50 years and examine the impact of new-economy technology on the organisation of firms, the organisation of markets and competitive and cooperative relationships between firms.

The costs associated with the writing and monitoring of contracts and the organisation of markets depend on the cost of acquiring, analysing, developing and using information. 2 It follows that changes in the technology associated with the acquisition, storage and use of information may change transaction costs and thereby the relative costs of different economic institutions associated with economic activity. Coase (1937) emphasised that transactions costs are a critical element in determining the size and scope of a firm. Changes in transactions costs therefore affect assessments of whether an activity should be carried out within a firm or contracted out. Changes in transactions costs may also affect the operation and even the feasibility of organising markets. It is conceivable that the information technology of the new economy may so lower the costs of the organisation and participation in a market that new markets may be created. An obvious example is the emergence of competitive markets for activities that have until recently been considered to be natural monopolies best internalised within state-owned or regulated firms such as electricity.

Information is also central to cooperation between firms. Economists have long recognised that cooperation between firms may be efficient (for example, when joint ventures reduce industry-wide costs for particular types of


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
The New Economy in East Asia and the Pacific


Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 326

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?