  Recently, the French Senate approved a law that imposes a 3% tax on revenue
generated from digital services by companies above a certain size. While there
is a lot of political debate about economic consequences of this action, it is
actually interesting to reverse the question: We consider the long-term
implications of an economy with no such digital tax. More generally, we can
think of digital services as a special case of products with low or zero cost
of transportation. With basic economic models we show that a market with no
transportation costs is prone to monopolization as minuscule, random
differences in quality are rewarded disproportionally. We then propose a
distance-based tax to counter-balance the tendencies of random centralisation.
Unlike a tax that scales with physical (cardinal) distance, a ranked (ordinal)
distance tax leverages the benefits of digitalization while maintaining a
stable economy.
