This article also made me think of a fun/fascinating project: creating a industrial organization economics model of the impacts of the Great Firewall on Chinese

This article also made me think of a fun/fascinating project: creating a industrial organization economics model of the impacts of the Great Firewall on Chinese firms. Are the economic benefits of the Great Firewall (e.g. propping up China's tech firms by preventing American competition) greater than the economic harms of hindering many businesses with a limited internet? China is effectively deploying an infant industry model (http://en.wikipedia.org/wiki/Infant_industry http://en.wikipedia.org/wiki/Infant_industry) but instead of using monetary tariffs, they are slowing down or blocking foreign services. This has undoubtedly aided companies like Weibo and Baidu. Simultaneously, the firewall acts like a tax on domestic Chinese companies. By raising the cost of accessing information or foreign services, it is raising transaction costs for virtually all Chinese businesses. The model could be a simplified economy with different types of firms that have varying degrees of needs for information. Add a tax (or some similar way to model the transaction cost of finding that information when faced with different levels of censorship). That tax would be only levied on certain information goods (foreign internet services). Then both businesses and consumers choose which internet services and information they will consume when faced with this tax. The internet services and information are an input to the Chinese firms' production functions and an input to the Chinese consumer's utility functions. You could even test the model using this upgrade as a natural experiment. These censorship upgrades are an exogenous shock to access to foreign information. They are effectively an unanticipated tax increase. Data could be collected on how much this decreased business productivity in the days after the change and used as a proxy to estimate the tax. Similarly, when people pay for VPN services (or other ways to get around censorship), these can be modeled using averting costs (generally used to model pollution costs). A traditional example of averting costs: a person buying bottled water to avoid getting diarrhea related illnesses in the developing world. The model assumes that the cost of the bottled water is less than the cost of getting the illness (thus why it is a rational averting behavior). Therefore, the amount spent on the bottled water is a proxy for the unobservable cost of polluted water (albeit a lower bound). (Note this is only true in certain cases in the developing world, as obviously people the developed world are drinking bottled water when their water is entirely safe to drink). Thus, the VPN can be used as a proxy for how much the Chinese are willing to pay to minimize the harm of the Great Firewall (and thus representative of a lower bound of the cost of the firewall).