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Bartholomae, F (2020). A Simple Economic Model to Explain Different Digitization Patterns. Applied Economics Quarterly, 66(4), 239-257.
Bartholomae, Florian W. (2020). "A Simple Economic Model to Explain Different Digitization Patterns" Applied Economics Quarterly, vol. 66no. 4, 2020 pp. 239-257.
Bartholomae, F (2020). A Simple Economic Model to Explain Different Digitization Patterns. Applied Economics Quarterly, Vol. 66 (Issue 4), pp 239-257.


A Simple Economic Model to Explain Different Digitization Patterns

Bartholomae, Florian W.

Applied Economics Quarterly, Vol. 66 (2020), Iss. 4 : pp. 239–257

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Author Details

Florian W. Bartholomae, Professor of Economics, Munich Business School, Elsenheimerstr. 61, 80687 Munich, Germany, and Privatdozent, Bundeswehr University Munich.


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Many firms have to decide whether and how much of their business activities they want to digitize. Several studies point to considerable differences, especially between small- and large-sized firms. This paper develops a simple model that shows under which conditions digitization can be profitable for a firm. At first, different competitive situations are taken into account and subsequently, the effects of security problems on digitization decisions are examined using the example of the dangers of a cyberattack. The results show that digitization is a dominant strategy, which results in a prisoner’s dilemma if the competition is fierce. Moreover, in highly competitive markets, firms should set common security standards to protect against unauthorized access.

Table of Contents

Section Title Page Action Price
Florian W. Bartholomae: A Simple Economic Model to Explain Different Digitization Patterns 1
Abstract 1
1. Introduction 1
2. Simple Model of Digitization Decision 2
3. Digitization and Cybercrime 9
4. Decision for Data Security 1
5. Conclusion and Recommendations for Action 1
References 1