The Economics of PSI: Policy-Oriented Analysis

The Economics of PSI:
a Policy-Oriented Analysis

Raimondo Iemma
Nexa Center for Internet & Society | EVPSI
http://nexa.polito.it

LAPSI 4th Conference, Turin 9th of July 2012

Items discussed
●
Economic nature of PSI
●
Upstream features
●
Downstream features
●
Costs vs benefits


Three assumptions


Three assumptions

1) PSI holds recurrent features of digital
information goods + further characteristics;


Three assumptions

information goods + further characteristics
2) Need to separate the inherent features of a
good from the attributes of its supply
(licensing, pricing, etc.);


Three assumptions

information goods + further characteristics;
2) Need to separate the inherent features of a
good from the attributes of its supply
(licensing, pricing, etc.);
3) The decision agent is the Government (or the
PSI holder itself).

PSI in the digital environment
•
Non-rival in consumption (access + reuse)
•
Hardly excludable (and with ex-ante and ex-
post costs)
•
In some cases, it may be an experience good


•
•
post costs)
•
--> PSI as (potentially) an impure public good


•
•
post costs)
•
--> PSI as (potentially) an impure public good
--> What matters is whether and how PSI is
available for reuse


Currently, PSI is made available as...
•
A public good
--> Open Data platforms


•
A public good
•
A club good
--> Firm registries
(only a few players corresponding a fee can
actually reuse PSI de jure)


•
A public good
•
A club good
--> Firm registries
(only a few players corresponding a fee can
actually reuse PSI de jure)
•
'Something in between' (see e.g. the case of DK
addresses explained afterwards)

Peculiar cost structure
•
Not only marginal costs of reproduction tend to
zero...
•
but, more importantly, fixed costs (collection,
management, etc.) have already been covered.


Peculiar cost structure
•
Not only marginal costs of reproduction tend to
zero...
•
but, more importantly, fixed costs (collection,
management, etc.) have already been covered.
--> we do not have to find an efficient way to fund
the creation of PSI (as ancillary / incidental good);
--> PSI is (almost) available for reuse.


Usual (first) steps by a PSIH to
make PSI available for reuse
Activity Main cost item

1) Setting the stage Internal coordination
Internal education
Definition of guidelines

2) Opening a few datasets Small technical costs (usually datasets
that do not require any manipulation)

3) Opening more 'critical' datasets Anonymization (where needed)
Meaningful metadatation (where
needed)


Back to the cost structure
•
Fixed costs are to be taken for granted.
•
To make PSI actually available for reuse:
•
empirically, internal coordination costs represent
the most relevant item (this is the 'fixed part' of the
supply costs);
•
strong economies of scale emerge;
•
efficiency curve effects.


Demand-side
•
Strong network effects
●
the value of a dataset increases the more it is linked or
combined with other datasets (think of Linked Open
Data)
•
PSI as 'basic input'
●
centralized knowledge to be combined with local
knowledge
●
e.g. 'Apps4Italy': around 50 of the ideas could not be
implemented without PSI


PSI as Infrastructure? (cfr. Frischmann)
Basic features:
1) significant role of Government (provider, subsidizer,
coordinator or regulator);
2) traditionally managed as commons (not prioritized);
3) positive externalities.


PSI as Infrastructure? (cfr. Frischmann)
AND:
- non rival consumption of its resources;
- producing input to downstream activity;
- wide range of (private, public, social) goods downstream.


Basic situation
A change in the PSI-supply policy of a specific PSIH
holder:
•
from a closed and / or paying reuse;
•
to an open / free reuse.


A possible (welfare) approach
(cfr. Houghton)
•
PSIH net position
•
Annual foregone revenues (-)
•
Annual savings (+) / e.g. transaction costs


(cfr. Houghton)
•
PSIH net position
•
•
•
(Re)users savings
•
No more payment (+)
•
Time saved (finding material) (+)
•
Time saved (license enquiries) (+)


(cfr. Houghton)
•
PSIH net position
•
•
•
(Re)users savings
•
No more payment (+)
•
•
•
Welfare impact / externalities
•
Based on ex-ante vs. ex-post reuse indicators


(cfr. Houghton)
•
PSIH net position
In some cases, a positive
•
Annual foregone revenues (-) balance can be identified
even at this stage
•
•
(Re)users savings
•
No more payment (+)
•
•
•
Welfare impact / externalities
•
Based on ex-ante vs. ex-post reuse indicators


After all...
... benefits are distributed, while costs (and revenues for
PSIH) are localized.
Therefore, when drafting policies we should (also) ask
ourselves:
How do the benefits from PSI have to be allocated / internalized?
At what stage of the PSI supply should competition (if any) be
actually achieved? Ideally --> at the earliest possible stage.


Some examples OPENNESS
DEGREE

•
'Typical' firm registry: (virtual) competition downstream
'distributors'


DEGREE

•
'distributors'
•
Public transport companies using PSI as 'bargaining chip' with selected
complementary players (e.g. maps producers), releasing as open
only a small subset of their data. No competition


DEGREE

•
'distributors'
•
•
DK address data: once not available as centralized DB, now available to
distributors mainly for 'supply chain' reasons but at very small costs
(so that double marginalization on users has lower effects); actual
competition downstream those distributors


DEGREE

•
'distributors'
•
•
DK address data: once not available as centralized DB, now available to
distributors mainly for 'supply chain' reasons but at very small costs
(so that double marginalization on users has lower effects); actual
competition downstream those distributors
•
Spanish Cadastre: free and open data downloadable in bulk! Actual
competition downstream PSIH


Thank you

Raimondo Iemma
Nexa Center for Internet & Society | EVPSI
raimondo.iemma@polito.it


The Economics of PSI: Policy-Oriented Analysis

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