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Friday seminar - Maryam Farboodi, (MIT), A Model of the Data Economy

Maryam Farboodi, MIT, Sloan School of Management

Are the economics of the data economy new? During this presentation, Maruam Farboodi will walk present a paper, co-authored with Laura Veldkamp, in which they explore how increasing and decreasing returns play out. She will walk through how they constructed a dynamic, stochastic economy, where data is a long-lived asset. She will present that, in the long run, diminishing returns dominate and dynamics are like a classical economy: Comparative advantage dictates who produces what, and, without additional data externalities, allocations are efficient. She will also discuss that, in the short run, increasing returns dominate and new forces arise: Data-intensive goods or services are given away for free; many new firms are unprofitable; and some of the biggest firms profit primarily from selling data.

Dept. of Finance Friday seminars