Research Areas at the CREC
The CREC, formerly CISM, at the University of Texas at Austin has been the leading research institution in generating critical knowledge and understanding in the fields of Information Systems and Management, Electronic Commerce and the Digital Economy. The Center's current research activities actively seek to provide an efficient and effective framework for global electronic commerce and the digital economy through an integrated research agenda that focuses on correlative effects among network infrastructure, products, processes, payment systems and policies, using markets and economic analysis as the central unifying theme.
The Center's vision is to assure that electronic commerce processes and applications achieve their efficient outcomes promised for the digital age. That vision is implemented in an interdisciplinary research focusing on developing technologies and applications that increase business productivity, consumer satisfaction, market efficiency, society's welfare and the effectiveness of government policies.
To fulfill such an integrated agenda for research and education, members of the Center are drawn from leading faculty and researchers in Business Administration, Computer Science, Law, Economics, Communication and Library Science. The Center's collaborative effort is the first in organizing interdisciplinary EC research, emphasizing economics and market efficiency as the unifying framework, and establishing EC as a new discipline in its own right.
The scope of the Center's research covers a broad range of activities which are characterized by the use of enabling digital technologies in networks, computers and software. Communications infrastructure, computer and other enabling technologies lay the foundation of the market. This foundation allows innovative digital processes (e.g. intranets, extranets, virtual firms, online search and marketing, online auctions and market-making mechanisms, logistics-based distribution and real time consumption) and products (e.g. digital currency, smart products and remote/real-time services) to enhance and replace physical processes and products. Government agencies and policies also play a critical role in determining the outcome of this new market economy. The Center's major research areas cover these broad issues that range from market infrastructure to policies on the strength of its multidisciplinary body of researchers.
Get a printable CREC Research Areas brochure (PDF file).
Publications Link: Selected works by the CREC researchers are available online at CREC Working Papers and Publications.
The Internet Economy Indicators
The rapid growth of the Internet and e-business applications has confirmed that the new economy is the engine of productivity growth and economic expansion. But the complexity and inter-relatedness of technologies and business processes made it difficult to measure precisely the size and performance of the Internet economy. CREC has developed, along with Cisco Systems, a layered model of the Internet economy and publishes quarterly reports on revenues and employments in this critical sector. See Internet Indicators Web site.
Wireless Networking and Mobile Commerce
The wireless data industry is leading the transformation into anywhere, anytime economy through ever-present networking, interactive content delivery and m-commerce. Its growth and economic viability depends on applications and solutions that can extend the usability and the market for wireless content and services. CREC’s research on the wireless industry focuses on conceptual models and practical solutions in wireless content and networking. On content and data service markets, research activities center on pricing and differentiating strategies for interactive value-added services which will generate the bulk of future revenues for the wireless data industry. On network applications and security, CREC is developing a collaborative wireless computing environment based on P2P architecture, and an enhanced wireless network security protocol which is implemented through cooperative technological solutions and economic incentive mechanisms against such potential threats as distributed denial of service attacks.
E-Business Value Assessment
As e-business tools and models proliferate, investments in technology must translate into financial and operational successes. CREC’s e-business value assessment models investigate key e-business drivers, their success rates and factors that benefit those who invest in Internet technologies and tools. Sponsored by Dell Computer Corporation, this project is one of the largest and in-depth study into the correlation between technology investment and business excellence measures.
Economic Modeling of Network Management
CREC’s network management and pricing studies examine the role of economic concepts in managing resources in large-scale networks. In a series of papers, computational approximations to "correct" network resource prices are presented and evaluated using simulation techniques. Methods for estimating user demand functions have been developed and the approximations are used in the price formation methods. Based on the simulation results, billions of dollars worth of improved network performance can be achieved. Recent research has explored the impact of multiple ownership of the network on resource management and overall network performance. The management of corporate networks using economic pricing methods has been one application of the research on resource allocation. Based on simulation results, significant improvement in user satisfaction is achievable.
Document Authoring Incentive System (DAISy) for Evolving Contents
An efficient price and a mechanism for sharing revenues (or royalties) among multiple authors are essential for efficient resource allocation and promotion of knowledge creation and usage in the digital age. But pricing digital software and contents is an extremely complex task when they are created collaboratively by multiple authors and evolve continuously as in the case of Open Source software development. Going beyond current researches that focus on the demand-side efficient prices for digital copies of static books and journal articles, this project, utilizing economic modeling and classroom experiments, focuses on supply-side pricing issues when revenues are expected to be allocated among authors of dynamic, collaborative, and evolving software and contents.
Incentive Designs in Wireless Entertainment Market
Entertainment services are poised to dominate the wireless traffic in the extended Internet. Nevertheless, currently available wireless entertainment applications are limited by the constraints of the wireless network as well as the handsets used for such activities. Various incentive schemes such as prizes and contests are used to maximize consumer interests and revenue potentials in this newly emerging market. In this study, CREC researchers focus on evaluating such incentive mechanisms in terms of their efficiency to promote sales, their effectiveness in design and implementation, and the extensibility of their rules and governance structures to other industries and markets.
Capacity Provision Networks for CDN
In today’s capacity-demanding Internet, Content Delivery Networks are used to distribute web content to cache servers located at the edge of the Internet close to clients. While CDNs address supply-side needs to publish and deliver content, this project focuses on the market for demand-side caching, where an ISP could set aside an amount of his web capacity to cache and service such specific demands from his customers, demonstrating the practical business viability of a cooperative Capacity Provision Network market. A CPN is a network of cache servers owned and coordinated by a set of ISPs servicing their respective demand-side capacity requirements. Objectives of this research are to develop a stochastic ISP-CPN model for capacity planning, to develop an analysis of the model under social optimization as well as bargaining, to develop a model for resource sharing via trading, and to extend the model to a multi-ISP trading situation. This extension leads to a framework for analysis of cache capacity trading markets for CPN in general and tracing the evolution of market mechanisms of the future.
Financial Bundle Trading System (FBTS)
FBTS is a continuous electronic market that can handle bundle trading and can be accessed through the Internet. CREC's researchers have developed the FBTS to investigate how technology-driven marketplace innovations affect financial market's organization and institutional structure. In this bundle trading, market participants can trade assets in bundles or baskets in arbitrary proportions. In order for electronic markets with new trading mechanisms to function, we need a network computing environment where traders from virtually anywhere can conduct businesses interactively and dynamically. The building block of such an environment is the distributed computing, which is based on the convergence of new technologies such as the WWW, Java and CORBA. FBTS operates in a pure Java environment to achieve its continuous and dynamic trading. Its distributed application and object-oriented computing model utilizes Java Remote Method Invocation (RMI).
Online Auctions and Smart E-Marketplaces
Among market innovations enabled by the Internet, online auctions and electronic marketplaces are the fastest growing applications in both business-to-consumer and business-to-business segments. But technologies that offer new opportunities also introduce possibilities for fraud and misbehaviors by sellers, buyers or the intermediaries. A shill bidding is such an example where sellers place phony bids to drive up bid prices. CREC’s research on online markets centers on shill bidding and other emerging issues to examine and improve theoretical models and their practical impacts in the technology-driven marketplaces. CREC’s research agenda also includes economic issues in the competitive structure of auction markets, a Java-based bundle trading system in equity trading markets, and organizational roles of market makers and auctioneering intermediaries.
Digital Product Companies
The Digital Product Companies project explores how to organize and operate a virtual organization that is in the digital product business. Electronic commerce promises its biggest gain in innovating within-business organizations and business-to-business processes. Businesses have found immediate benefits from reorganizing internal business organizations and activities, inventory and supply chain management, and services to consumers using the Internet and intranets. Still larger benefits will result from innovating processes in business-to-consumer interactions. CREC's researches on EC process innovations have focused on production and management issues for electronic commerce firms, algorithms for distribution and interaction in a networked environment, and the structure of the new market.
Knowledge Management and Incentive Structures
Knowledge is recognized as a critical organizational resource but its characteristics pose serious challenges in organizing and managing it for strategic purposes. The goal of this project is to build upon recent developments in contract theory and theory of teams to examine how information technology and astutely designed incentive structures can be employed to manage knowledge. Knowledge, both explicit and tacit, is created by employees, and enterprises strive to capture and share this knowledge to improve the output quality and productivity of all their employees. But without right incentives, employees may not capture, code, transfer or share it with other employees and the firm. The objective of this research is to design a mechanism where properties of information technology and appropriately designed incentive structures are used to manage, capture and share newly created knowledge within a firm.
Application Service Providers and Contract Choices
Contractual arrangements are the key to negotiating a successful outsourcing initiative but the inherent technological uncertainty in service provision over the Internet and the difficulty in describing complex IT contracts impose limits on enumerating the contractual provisions in detail. This research focuses on the choice of contracts in the application service provider markets, and establishes the appropriateness of contractual forms under different regimes of technological uncertainty, duration, reputation of the ASP, contractual performance guarantees as well as differences in the specific investments made by ASPs.
Corporate Governance in New Technology Companies
In the post-Enron era, the trust in Corporate America has been severely challenged. It is the nature of new technology, combined with sub-optimal incentive schemes for the executives, that induces uncertainty and distrust between investors and corporate executives, who have asymmetric information and expectation about new technologies and their market prospects. We develop a multi-period game-theoretical model with asymmetric information-updating process and investigate how untruthful reporting emerges in equilibrium. Because of the asymmetric learning processes for the potential of new technologies, the market is prone to failures and it is highly costly for new technology companies to attract investments, In an extreme case, investors completely abandon the investment opportunity on the new technology even though the new technology ex ante is far more profitable in expectation than traditional investments should there be no agency issue. To solve the problem, we examine regulatory remedies such as the disclosure of insiders’ trading and reforms in the accounting system.