SOME MARKET EFFECTS OF E-COMMERCE

Abstract

An important characteristic of E-commerce is that it is a form of technological change. The effects of E-commerce induced reductions in business production costs and on seller to buyer transaction costs are assessed. Comparative static models for different market structures are used to assess the effects of E-commerce on prices, quantities, aggregate efficiency gains, and the distribution of benefits and costs. Ultimately consumers are the principal beneficiaries via lower prices. Competitive forces and profit incentives induce firms to adopt cost reducing E-commerce technology.