From industrial economics to digital economics: an introduction to the transition

Abstract This paper focuses on creating a basic awareness of the new economic coherence, which has been provoked by the introduction of modern Information and Communication Technologies (ICT). It is based on methods of traditional Industrial Economics (bricks-and-mortar economy). The paper shall endeavor to show the differences that exist between Industrial- and Digital Economics, but shall also show that we do not need to burn the old textbooks. Nevertheless there is an urgent need to rewrite them, in a sense of refocusing. Starting from the new basic conditions of the Digital Economy, which get especially emphasized in section (I.2.) The Knowledge Society, and (I.3.) Inter-Net-Working, the focal point is becoming the conduct between buyers and sellers, which is demonstrated in sections about innovation (II.3.2); pricing (II.3.3), behavior of firms (II.3.4), product strategy and advertising (II.3.5) and market equilibrium (II.3.6). The most essential issue in the Macro part is surely in section (III.3) Digital Divide and the Catch Up. This paper aims to lay a wide-ranging base for untangling the Digital Economy, in order to facilitate and moderate the high-speed evolution. It does not claim to be a complete economic research of the New Economy. The fields it touches are too far-reaching and manifold to make this possible. Further academic and practical effort to explore and research the all-penetrating New Age Economy is indispensable. Especially for developing countries, the advent of the New Economy could be a historical chance to make a big leap, regarding their relative degree of development, but could also mean a dangerous set back. In the actual state of development the paper is part of an investigation of the Digital Economy in Latin America on behalf of ECLAC.