Economic aspects of Public Sector Information

LAPSI 4th Conference, Turin 9th of July 2012

The Economics of PSI: a Policy-Oriented Analysis

Raimondo IemmaNexa Center for Internet & Society | EVPSI

http://nexa.polito.it

Items discussed

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

Items discussed

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

Three assumptions

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

Three assumptions

1) PSI holds recurrent features of digital 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

1) PSI holds recurrent features of digital 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

--> PSI as (potentially) an impure public good

--> 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

--> Open Data platforms• A club good

--> Firm registries(only a few players corresponding a fee can actually reuse PSI de jure)

--> Open Data platforms• 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)

Items discussed

● Economic nature of PSI

● Upstream features● Downstream features● Costs vs benefits

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 coordinationInternal educationDefinition 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.

Items discussed

● Economic nature of PSI● Upstream features

● Downstream features● Costs vs benefits

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)

- non rival consumption of its resources;

- producing input to downstream activity;

- wide range of (private, public, social) goods downstream.

Items discussed

● Economic nature of PSI● Upstream features● Downstream features

● Costs vs benefits

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

A possible (welfare) approach(cfr. Houghton)• PSIH net position

• (Re)users savings• No more payment (+)• Time saved (finding material) (+)• Time saved (license enquiries) (+)

• Welfare impact / externalities• Based on ex-ante vs. ex-post reuse indicators

In some cases, a positive balance can be identified even at this stage

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

'distributors'

OPENNESS DEGREE

'distributors'

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

OPENNESS 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

OPENNESS 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

OPENNESS DEGREE

Thank you

Raimondo IemmaNexa Center for Internet & Society | EVPSI

raimondo.iemma@polito.it

Economic aspects of Public Sector Information

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