Understanding Information Economics

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When you think about economics you think about the production, consumption and distribution of various goods and services. In economics goods and services are bought by individuals within our society for consumption and if there is enough demand for these products the price can increase especially if the amount supplied stays the same. When there is a shortage of goods and services this means that everyone is not able to purchase those goods and they are forced to make choices such as acquiring replacement goods. Something that is similar to the original product they were considering.

Information economics is a product or commodity just like all other products however it cannot be treated the same. This particular portion of economics falls up under microeconomic theory and for the most part it takes a look at how the economy is impacted by information. There is no shortage or deprivation when it comes to information because anyone can consume or access that information. You never run into a situation where there is scarcity, unlike other goods and services. Everyone in one form or another has access to information. Information has some distinct advantages and characteristics over normal products and services. Once information is produced it can be produced very easily for a very nominal cost.

 

Since information has a relatively lost cost to reproduce, no matter how many times it is duplicated, one can make use of bundling. This is a procedure used to include other information items and putting them together in a package to be sold. This bundling process increases the chance that the information will be purchased and also prohibits, more or less, the individual from going out and looking for free sources of the same information. Sometimes a consumer may not have wanted to purchase a particular information product but because other products were included they will now purchase even if they had no intention of purchasing one of the products. In effect you are creating or giving information more value in the eyes of the consumer.

Having the right information and enough information can give someone an advantage over someone who does not have the same facets of information. Information can definitely affect which decisions are made within a company, organization, society or even a country. The better prepared you are it relates to the information you have the better positioned you are to make decisions that put you in a superior position than that of others

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