Classroom Companion: Business

Definition 1.2
Digital economics is the branch of economics studying digital services and goods.
The academic field of digital economics overlaps and relates to other fields of eco-
nomics. Digital economics is also known under different designations, each desig-
nation having a slightly different focus and scope. Some of these are:
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Network economy focuses on businesses in which much of the economic value 
is generated by network effects (see 
7
Chap. 
9
). Network effects are abundant 
in the digital economy and explain how value is generated in several, but not all, 
digital businesses.
 
Chapter 1 · The Digital Economy

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1
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Platform economy focuses on businesses that act as platforms. The primary 
business idea is to connect two or more user groups (two-sided or multisided 
markets). Platform economy is closely related to network economies since net-
work effects are also important drivers for platform businesses. However, not all 
network economies are platform economies and vice versa. Multisided plat-
forms are described in 
7
Chap. 
10
.
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Information economy focuses on information products and how they are produced 
and traded. The information economy is part of the digital economy, but the latter 
is broader in scope since it also includes more than pure information goods.
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Data economy focuses on the business of harvesting and analyzing data. Data 
is gathered from users or the environment and stored in large databases. Big 
Data techniques and artificial intelligence are applied to analyze the data, where 
the purpose is to extract information of value to businesses or governments. 
Such data may also be traded on the market, for example, as input to statistics 
or as the basis for producing targeted advertisements.
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Virtual economy is the economy of virtual worlds, e.g., 
World of Warcraft and 
Second Life. To some extent, virtual economies reflect the real economy regard-
ing the supply and demand of goods, trading, and network feedback. Virtual 
economies are mostly disconnected from the real economy. However, there are 
examples of virtual economies that can generate trade in the real economy (e.g., 
gold farming in World of Warcraft).
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